New Data from Bank of America Points to Decrease in Bond Yields According to a recent survey conducted by Bank of America, investors are highly confident that bond yields will decrease in 2024. The monthly fund managers survey showed that 80% of respondents expect bond yields to fall, marking the highest percentage ever recorded by the firm.
This data highlights a strong conviction among investors in lower inflation, rates, and yields. The belief in lower bond yields could potentially benefit the stock market, which has faced challenges in recent months due to rising yields.
Keith Lerner, Truist co-chief investment officer, believes that yields have been the biggest challenge for the market. However, the recent fall in yields has contributed to the S&P 500’s longest winning streak in two years.
The 10-year Treasury yield has seen a significant increase in recent months but has started to decline due to increased confidence that the Federal Reserve won’t hike rates. This decrease in yields is welcomed news for investors who have been concerned about the potential impact of rising rates on their portfolios.
The Bank of America survey coincided with the release of the latest Consumer Price Index report, which showed prices increasing at their slowest pace in two years. This further supports the notion of lower inflation and rates, adding to the market’s optimism.
In response to the survey, yields fell, with the 10-year yield dropping by over 18 basis points to 4.4%. This decrease suggests that investors are increasingly confident in their belief of lower bond yields.
The survey also indicated an overall optimistic tone among market participants, with a majority of respondents believing that the Federal Reserve is done hiking rates. This sentiment is reflected in investors’ allocation of assets, as they are now overweight equities for the first time since April 2022.
Furthermore, concerns about inflation and central banks are diminishing, according to the survey. This shift in sentiment suggests that investors are positioning themselves for a favorable market environment and are optimistic about the future performance of equities.
In conclusion, the latest data from Bank of America reveals a high level of confidence among investors that bond yields will decrease in 2024. This news, combined with the positive outlook for the stock market, points to a shift in investor sentiment towards lower bond yields and a hopeful future for equities.