The United States could fall into economic recession with the anticipated policy rate hikes amid the inflationary uptick, strategists at Bank of America warned. BAC is up 1.36%, while QQQ is down 0.54%.
- Chief Investment Strategist Michael Hartnett warned clients of the possible impacts of policy tightening, with what he called an ‘inflation shock’ worsening.
- Hartnett believes a ‘rates shock’ is just starting, and a ‘recession shock’ is expected to follow, with commodities and cryptocurrencies likely to overtake stocks and bonds.
- This comes after the Federal Reserve announced the possible scaling down of its $9-trillion balance sheet as early as next month, at the doublepace.
- Market watchers also anticipate a policy rate hike by as much as 50 basis points.
- Bank of America data showed that equity funds recorded a 10-week high inflow of $5.3 billion in the past week, while emerging markets saw $2.2 billion.