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%.
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.