Unprecedented stimulus sparked worries about inflation earlier this year, driving U.S. 10-year borrowing costs to more than 1.8% in March and spooking stock markets. But those concerns have abated recently, pushing stocks to record highs and yields back below 1.5%.
“Investors (are) bullishly positioned for permanent growth, transitory inflation and a peaceful Fed taper,” said Michael Hartnett, chief investment strategist at BofA.
Some 72% of investors said inflation was transitory, according to the June BofA survey.
Still, inflation and a “taper tantrum” — a selloff related to the Fed scaling back its quantitative easing programme — remained the top tail risks for markets, BofA’s survey of 224 fund managers with $667 billion in assets under management showed.
Long commodities overtook bitcoin as the “most crowded” trade in the survey, but still 81% of investors surveyed said the cryptocurrency was in “bubble” territory.
