Fund Managers Are Bullish but Wary

Top money managers have turned sharply more bullish since the start of the year. But with that comes a problem: Inflation fears, they say, are back on the table. These are the findings from Merrill Lynch's latest global survey of institutional investors.

"Asset allocators increasingly believe that the Fed should be more concerned about the risk of higher inflation than about the risk of slower economic growth," says Merrill adviser David Bowers, who produced the report.

It's no wonder the yield on 10-year Treasuries, which reflects inflation fears, has risen to 4.7% from just over 4.4% at the start of December. ...