Investment managers are more positive about the U.S. economy, finds a Northern Trust survey.
A majority (54%) expect U.S. GDP growth to accelerate over the next six months compared to 38% with that view in the first quarter. Sixty-four percent expect housing prices to increase over the next six months, a 12 percentage-point jump from the first quarter.
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“After a slowdown in economic activity in the first quarter, managers are expecting a pick-up in the U.S. in the second quarter,” says Christopher Vella, chief investment officer for multi-manager solutions at Northern Trust. “Despite expectations for increased economic and profit growth, a large portion of managers expect market volatility to increase.”
Expectations for a U.S. interest rate hike rose in the second quarter, with 58% expecting rates to rise during the next three months, up from 42% with that response in the first quarter of 2015.
Also, for the second quarter in a row, “U.S. monetary policy” and a “rise in interest rates” held the top two spots in the managers’ ranking of the greatest risks to equities over the next six months.
Nearly three-quarters of managers (74%) expect equity market volatility to increase over the next six months, the second-highest reading on market volatility since the Northern Trust survey began in the third quarter of 2008.
Fewer managers, 9%, are holding cash above their historically normal levels, down from 22% holding extra cash in the first quarter. Decreasing commodities exposure, another defensive measure, was down sharply in the second quarter: just 11% of managers said they lowered their commodity exposure, after 32% said they had done so in the first quarter.
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