Ever since the Federal Reserve dropped short-term interest rates to near-zero and started buying up bonds through its quantitative easing program, sceptics were freaked out that the unwinding of easy monetary policy would mean doom for the financial markets.
But stocks and the dollar have been rallying, even with the Fed tapering quantitative easing and warning the markets that higher rates are around the corner.
A new Barclays survey of 972 global investors shows that fear of Fed policy withdrawl is way down from a year ago.
The top worry: geopolitics.
Of course, the risk rankings differ for various types of investors.
“Equity investors see geopolitical turmoil as the biggest risk for equities followed by Fed policy withdrawal, while the opposite is true for credit investors,” Barclays Guillermo Felices writes. “This suggests that equity investors see tighter Fed policy as limiting the upside rather than derailing the asset class.
To reiterate, stock market investors see “tighter Fed policy as limiting the upside rather than derailing the asset class.” This confirms the ongoing theme of bears evaporating from the market.
Overall investors generally remain bullish, particularly on stocks.
“More than half of the respondents said they believed equities would offer the best returns over the next quarter,” Felices said. See the chart below.