This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fixed Income Managers Look for Fed to Feed U.S. Growth

By Hal M. Bundrick

NEW YORK (MainStreet) ¿ In spite of the damage that rising interest rates could have on their portfolio values, institutional fixed-income money managers are reasonably optimistic about the U.S. economy, as well as global affairs. But they still want the U.S. Federal Reserve to pamper monetary policy. A strong majority of professional investors believes that easy monetary policy is either important, or critical, to sustaining positive trends, according to the Fitch Ratings Fixed-Income Forum survey of money managers.

More than half (57%) look for U.S. GDP growth above 2% over the coming year, compared to 40% of respondents providing a similar forecast earlier in the year. Notably, just 17% expected a 2% economic expansion in the July 2012 survey. That rate still lags the 3% average growth for the U.S. economy over the past 50 years. In addition, a strong majority (73%) believe the threat of inflation remains minimal.

The money managers are particularly upbeat about the European economy, expressing the most optimism in two years. Fewer money runners look for a recession in the eurozone, instead anticipating growth of at least 1%-2%.

Must Read: Lottery Winner Sues Advisors for Poor Policies

Professional fixed income investors are also more confident in the American housing market. According to the survey, a majority now see home prices growing above 5% this year and 43% believe housing has added at least 0.5% to U.S. GDP growth.

Obamacare remains a wildcard. Opinions were divided on the potential market risk posed by the Affordable Care Act, with no clear-cut consensus on the ACA's economic impact.

Few institutional investors now see sovereign issues as a high risk to the credit markets (versus 82% in July 2012), and nearly half of survey participants saw stability in the eurozone as sustainable over the coming year.

The survey also revealed strong agreement that bank lending conditions will remain favorable, with most investors believing that loan standards will continue to loosen over the coming year.

--Written by Hal M. Bundrick for MainStreet

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.01 1.05%
FB $99.75 -4.15%
GOOG $683.10 -0.07%
TSLA $147.99 -8.99%
YHOO $27.05 -3.30%


Chart of I:DJI
DOW 16,027.05 -177.92 -1.10%
S&P 500 1,853.44 -26.61 -1.42%
NASDAQ 4,283.7530 -79.3910 -1.82%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs