Under the Fed's rate cut wave, US stocks are expected to lead the way for the whole year, while US bonds and the US dollar are being neglected!

According to the latest survey by Bloomberg Market Live Pulse, as the Federal Reserve continues to cut interest rates, most respondents predict that the performance of the US stock market for the remainder of this year will outperform the government and corporate bond markets. Specifically, 60% of respondents are optimistic about the performance of the US stock market in the fourth quarter, 59% of investors prefer emerging markets over developed markets, and they are avoiding traditional safe-haven assets such as US Treasuries, the US dollar, and gold.

The survey results show that this risk appetite is in line with the bullish sentiment on Wall Street after the Fed's rate cut earlier this month. At the same time, the significant rise in the Chinese stock market following the government's increased economic stimulus has further boosted market confidence. Yung-Yu Ma, Chief Investment Officer at BMO Wealth Management, pointed out that the main challenge facing the US economy is the high short-term interest rates, so they have started to lean towards risk assets and US stocks, considering adding positions on pullbacks.

The Federal Reserve cut its benchmark interest rate on September 18 and is expected to continue cutting rates at the remaining two meetings this year. Most respondents (59%) expect a 25 basis point cut at each meeting, while 34% of respondents expect a larger rate cut, anticipating cuts of 75 or 100 basis points at each meeting. This forecast is close to the views of swap traders, who generally believe that by the end of the year, the total rate cut by the Fed will be around 75 basis points. Investor confidence in the Fed achieving a soft landing for the economy has boosted the S&P 500 index to rise in September, the first time since 2019.

Lindsay Rosner, Head of Multi-Asset Investments at Goldman Sachs Asset Management, stated that the Fed and other central banks still have significant room to cut rates, laying a good foundation for the US economy and making valuations more reasonable. However, when asked about trades to avoid for the remainder of the year, 36% of respondents believe that buying oil should be avoided, while 29% of respondents choose to avoid buying US Treasuries.

Although rate cuts may boost the bond market, given the strong performance of the labor market, investors have mixed views on the speed of the Fed's rate cuts and still have many questions about the fixed income market. Bloomberg strategist Simon White pointed out that the term premium on longer-term US Treasuries will rise, liquidity risks have intensified, and may further deteriorate In addition, the MLIV Pulse macro strategist survey also shows that investors have limited enthusiasm for the US dollar as a traditional safe haven asset. 80% of respondents expect the US dollar to remain roughly flat or fall by more than 1% by the end of the year. The survey was conducted from September 23rd to 27th, with participants including portfolio managers, economists, and retail investors. This week's survey also asked whether commercial real estate debt has passed its worst period