Macro Insights Weekly: Surveying investors’ market views


We present the result of our survey of 150+ banking and finance industry professionals. Responses reflect bearishness on the rates outlook but sustained interest in equities.
Taimur Baig, Chang Wei Liang17 Jan 2022
  • 56% of the respondents agreed with our call that there’d be three Fed policy rate hikes this year…
  • But a good 27% felt four or more hikes were on the table
  • Over half expect US 10-yr yield be at 1.9% of higher by the end of Q1, ’22
  • A full 80% see buying opportunities in Chinese stocks
  • 45% expect US tech stocks to remain dominant; more than 1/3 believe in growth-to-value rotation
Photo credit: Unsplash


Commentary: Surveying investors’ market views

During the course of our January Macro Insights Livestream held late last week, we asked the webinar participants, comprising of banking and finance industry professionals, a series of questions on the macro and markets outlook. We find such surveys very useful for gauging investor sentiment.

Our first question was on Fed policy outlook, where more than half the respondents agreed with our call that there would be three policy rate hikes this year, although a good 27% felt four or more hikes were on the table. We are looking at Fed funds rate to rise by 25bps each on March, June, and September, after which the Fed could well take a breather as inflation, labour market, and growth ease. Continued wage growth and sustained demand may well keep additional rate hikes on the table, time will tell. We think the possibility of just two rate hikes this year is small, given the current state of the economy. An additional Covid variant, a major asset market selloff, economic instability in China could cause the Fed to pause, however.



On the US 10-year yield expectation, survey respondents were rather bearish, with 56% seeing yields at 1.9% of higher. The ongoing selloff is expected by many to continue through the quarter, although the yield has already risen by nearly 15bps this year.



Moving on to the stock market, we queried the participants on their China outlook. A full 80% saw buying opportunities there, expecting a rally this year. 20% see the early trend of 2022 to persist, expecting another year of losses.



We then asked the respondents to prognosticate about the US equity markets. Remarkably, despite the recent selloff, 45% expect tech to remain dominant this year, although more than a third believe that a growth-to-value rotation, the re-opening trade in other words, is likely. In a tone similar to that of the responses to the China question, a full 20% saw no upside to the US market this year, having rallied exceptionally well in recent years.



These responses suggest bearish fixed income appetite with sustained interest in Chinese and US equities. Rates appear to be going up everywhere, which bodes ill for the real estate and credit market outlook, while within the equity space, rising yield ought to create some tremors. While all of this will take place against a hopefully receding pandemic and sustained strength in the global economy, the outlook for financial assets will likely be rather volatile, in our view.

Taimur Baig


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Taimur Baig, Ph.D.

Chief Economist - Global
taimurbaig@dbs.com

Chang Wei Liang

FX & Credit Strategist, Global
weiliangchang@dbs.com


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