RPT-Fitch: Sr. Investors More Optimistic but Monetary Policy Key
Sept 25 (Reuters) - (The following statement was released by the rating agency)
Senior fixed-income investors are more upbeat about the U.S. economy and less worried about global event risks but a strong majority still believes that easy monetary policy is either important or critical in sustaining positive trends, according to the Fitch Ratings / Fixed-Income Forum (FIF) Survey of professional money managers.
The consensus speaks to either the perceived fragility of the recovery or perhaps heightened caution following the deep financial and economic crisis of 2008-2009.
Opinions surrounding U.S. GDP growth firmed in the recent survey, with 57% of respondents placing growth above 2% over the coming year versus 40% earlier in the year (and notably just 17% in the Fitch / FIF July 2012 survey). However, the more pronounced shift surrounded Europe, which showed the best outlook results in two years. There were fewer votes for recession and more for growth of at least 1%-2%.
Views on the housing market recovery turned more bullish in this survey versus responses at the beginning of the year, which had been promising, and already conveyed optimism that fundamentals were on the mend. A majority of investors now see home price growth above 5% nationally this year, compared with just 12% in February, and 43% believe housing has added at least 0.5% to U.S. GDP growth.
Opinions on the degree of risk posed by the new healthcare mandate were surprisingly uniform at high, moderate and low, in stark contrast to those offered on inflation, where 73% of investors saw a low risk. Balanced views on the impact of the Affordable Care Act are likely due to the preliminary nature of the law and suggest that this could be a meaningful wildcard going forward.
Investors gave the most constructive views in several years on the sovereign debt crisis. Few now see sovereign issues as a high risk to the credit markets (versus 82% in July 2012), and nearly half of survey participants saw stability in the eurozone as sustainable over the coming year.
There was strong agreement in the survey that bank lending conditions will remain favorable, with most investors believing that standards will further loosen over the coming year.
For full survey results, see "Five Years Post Crisis - Easy Monetary Policy Still Perceived as Necessary," dated Sept. 25, 2013, available at www.fitchratings.com.
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