Based on expectations that US inflation will be transitory and that the Federal Reserve will clearly communicate its plans to reduce asset purchases, large global fund managers say that they are still investing in risky assets.
Fund managers interviewed at the Reuters Global Markets Forum agreed that the Fed may attach more importance to employment data than inflation, but held different views on when and how the Fed will announce a reduction.
Chief Investment Officer (CIO) Mark Haefele said that UBS Global Wealth Management was preparing for some inflation.
Haefele is betting on a reflationary deal - deals that outperform during periods of rapid economic growth. His investment preferences include energy and financial stocks, as well as Japanese stocks.
Rahul Chadha, global IT director at Mirae Asset Global Investments, believes that in the medium term, deflation is likely to be a more serious problem for the Fed.
US inflation data, published on Wednesday, showed that it is possible. inflation in the US has already peaked. Accordingly, this supports the Fed's assertion that the price increase will be temporary.
Rahul Chadha believes that there may be some sell-off of stocks with a cyclical orientation, as bond yields will rise in the near future, but reflationary transactions will regain their attractiveness in the medium term, as the Fed restricts yields.
AIA Group CIO Mark Konin suggests that the Fed will announce a reduction by November or December of this year, based on Chairman Jerome Powell's remarks about the strength of the labor market.
According to Konin, a sharp reduction in the US budget deficit will reduce the volume of Treasury securities issued, which may lead to market volatility if the Fed continues to buy bonds at the same pace.
According to Jim Leaviss, CIO of Public Fixed Income at M&G Investments, the Fed should announce its reduction plan earlier at its September meeting, and will begin to reduce asset purchases by November of this year.
These interviews were conducted in the chat room of the Reuters Global Markets forum.
