The vast majority of big money managers say the Federal Reserve will soon signal the beginning of the abrogation of its asset-buying program, according to a survey conducted by Bank of America.
A net 84% of respondents said the Fed will announce the scaling back in its bond buying program before the end of this year.
Twenty-eight percent of respondents expect the taper announcement to come at the upcoming Jackson Hole symposium, while 33% think at the September Federal Open Market Committee Meeting and 23% expect during the fourth quarter.
Expectations surrounding the timing of the first rate hike have been moved to 2023, wrote Michael Hartnett, chief investment strategist at Bank of America.
The Charlotte, North Carolina-based lender surveyed 232 participants with $702 billion in assets between June 6 and 12.
Questions surrounding the timing of Fed's rate hike and release date have swirled around trading desk in recent months as supply chain disruptions caused by COVID - 19 have resulted in the biggest annual price increases in over a decade.
The Fed has described the spike in inflation transitory and said the price increases would dissipate as the supply chain problems are resolved.
In August, declining amounts of fund managers approved a similar assessment. A net 65% of respondents said inflation is transitory, down from 70% in July. Twenty-two percent of those surveyed said inflation is permanent.
Increased inflation fears and the pulling back of tapering expectations have weighed on growth expectations with a net 27% saying the global economy will continue to improve. The reading was the lowest since April 2020 and below its maximum in March 2021 from a high of 91% in March 2020.
Investors are growing more defensive amid mounting growth concerns, increasing their allocations to cash, health care, insurance and utilities. At the same time, allocations to commodities, traditionally an indication of risk tolerance, fell to the lowest level since November 2020.
Those who say they are overweight and have to spend less said cash rose one percentage point to 13%, the highest in the past seven days since October 2020. Cash as a percentage of assets under management was 4.2%, up from 4.1% in last month.
More respondents, a net 40% said U.S. tech stocks were the most crowded trade for a second straight month.