(Bloomberg) — According to the latest Bloomberg Markets Live Pulse survey, US stocks are expected to outperform government and corporate bonds for the remainder of the year as the Federal Reserve continues to cut interest rates.
The survey, which gathered responses from 499 participants, revealed that 60% believe US equities will offer the best returns in the fourth quarter. Additionally, 59% of respondents expressed a preference for emerging markets over developed ones. This shift towards riskier assets, such as equities, comes after the Fed’s recent rate cut and China’s economic stimulus efforts.
Yung-Yu Ma, chief investment officer at BMO Wealth Management, noted that high short-term interest rates have been a challenge for the US economy. As a result, many investors are leaning towards risk assets like US equities.
The Fed’s decision to lower its benchmark rate in September has boosted investor confidence in a positive outcome for the economy. The survey indicated that many expect further rate cuts at the Fed’s upcoming meetings in November and December.
Lindsay Rosner, head of multi-sector investing at Goldman Sachs Asset Management, highlighted the potential for central banks, including the Fed, to continue cutting rates. This favorable backdrop could support the US economy and justify current valuations.
When asked about trades to avoid for the rest of the year, respondents pointed to buying oil and Treasuries. Concerns about oversupply and inflation risks have weighed on these assets despite their recent performance.
Overall, the survey showed limited enthusiasm for the US dollar, with many expecting it to remain flat or decline by the end of the year. The Bloomberg Dollar Spot Index has seen minimal gains year-to-date.
The survey, conducted among Bloomberg News readers, included a diverse group of participants, such as portfolio managers and retail investors. This week’s survey focuses on the outlook for commercial real estate debt.
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