Bank of America‘s chief investment strategist has warned the U.S. economy could feel some economic shocks. In recent times, inflation in the United States has run rampant and the Fed has felt the need to step in and manage the issue. On March 16, the U.S. Federal Reserve raised the benchmark bank rate for the first time since 2018, and the central bank expects six more increases this year. Meanwhile, on April 8, Reuters reports that BOFA’s Michael Hartnett says that the macro-economic situation is worsening.
With the macro-economic environment in calamity, the Fed hiking rates, and the central bank tapering large-asset purchases, the BOFA strategist said the U.S. economy could be headed for a recession. Hartnett insists that “‘Inflation shock’ worsening, ‘rates shock’ just beginning, ‘recession shock’ coming.” The BOFA analysts statements follow U.S. bond markets signaling that an economic downturn is predicted. This took place last week when the spread between 2-year and 10-year Treasury yields inverted, signaling the U.S. economy may be headed for a recession.
Hartnett‘s note to investors on Friday further said that commodities, cash, and cryptocurrencies “could outperform bonds and stocks,” according to the Reuters author Julien Ponthus. The BOFA note said that during the last ten weeks, emerging market equity funds saw better market performances as did debt vehicles. During the last six months, Bank of America has had a lot to say about cryptocurrencies. For instance, a BOFA analyst said in January that the smart contract platform token Solana’s market cap could take market share away from the current leader Ethereum.
Mortgage Rates Rise, BOFA Downgrades 9 Transport Stocks, BOFA Institute Says Households Have More Cash on HandIn December, BOFA explained it sees massive opportunity in the metaverse, and the month prior, the financial institution‘s chief operating officer detailed that he does not see crypto as competition. According to BOFA’s recent outlook, the bank expects the Federal Reserve to raise the benchmark rate by 50 basis points during the next meeting. Furthermore, mortgage rates hit 5% in April making homeownership a touch more expensive. BOFA has also downgraded nine transport stocks this week, after citing “deteriorating demand.”
While BOFA‘s chief investment strategist explained on Friday that assets like cash, commodities, and cryptocurrencies could do well, Bank of America Institute’s chief economist David Tinsley said on Thursday that people have been preparing for inflation with a cash surplus. “On average, the lower-income household has about $1,500 more in the savings and checking account than it did pre-pandemic,” Tinsley during a Yahoo Finance Live interview.