2nd Place is Inflation
American investors are most concerned about geopolitical risks among market risks.
On the 22nd (local time), major foreign media outlets reported this, citing the results of a Bank of America (BoA) Global Research survey.
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Conflicts in the Middle East region have recently intensified. Since October last year, Israel has been at war with the Palestinian armed faction Hamas, and recently exchanged retaliatory attacks with Iran. As a result, 80% of U.S. corporate credit investors identified geopolitical risk as their biggest concern in the current market.
However, despite rising tensions in the Middle East, investors showed an optimistic attitude toward investment-grade corporate bonds. Last week, total new issuance reached $33.6 billion (approximately 46.2874 trillion KRW). Dry powder (unfunded capital commitments) continued to be deployed, and credit positioning increased to a net weight of 29%. BoA forecasted that this week’s capital supply is expected to range between $15 billion and $30 billion (approximately 20.664 trillion to 41.328 trillion KRW). According to the survey, only 18% of respondents hold above-average cash levels, the lowest since September 2020.
Following geopolitical risk, investors cited inflation as their second biggest concern. Although the U.S. Federal Reserve (Fed) is expected to cut interest rates over the next two years, concerns about inflation remain. BoA analysts stated, "As risks to this outlook increase, it could weigh on future capital inflows."
Similar results were found in a JP Morgan Chase survey. On the same day, the U.S. business magazine Fortune reported, citing JP Morgan’s survey results, that investors identified the three biggest threats in the market this year as inflation, geopolitical turmoil, and interest rate hikes. The survey was conducted from March 26 to April 17.
About one-third of respondents named "inflation resurgence" as the biggest threat, 21% cited geopolitical turmoil, and 18% said interest rate hikes or rate maintenance. Only 7% of respondents expected a recession.
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