Macro Insights Weekly: Surveying investors’ market views
- 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
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.
To read the full report, click here to Download the PDF.
Subscribe here to receive our economics & macro strategy materials.
To unsubscribe, please click here.
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). This report is intended for “Accredited Investors” and “Institutional Investors” (defined under the Financial Advisers Act and Securities and Futures Act of Singapore, and their subsidiary legislation), as well as “Professional Investors” (defined under the Securities and Futures Ordinance of Hong Kong) only. It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 13th Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong SAR
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.