(Repeat for additional subscribers)
April 9 (The following statement was released by the rating agency)
Investors remain tethered to easy monetary policy
according to the latest Fitch Ratings/Fixed Income Forum Survey of professional
money managers. Survey respondents desire U.S. Federal Reserve support despite
the strongest positive consensus in two years on U.S. growth, a belief that the
recovery in Europe is sustainable and, perhaps most encouraging, good activity
in emerging markets.
A constructive macro backdrop notwithstanding, the majority of investors (70%)
still view monetary support as either important or critical. This is down from a
high of 91% recorded in summer of 2013, but with the caveat that at the time 43%
placed GDP growth over the coming year at less than 2%. Only a few shared that
sober opinion now.
In the new survey, conducted in February and March, 89% of investors saw U.S.
GDP growth of at least 2%-3% over the coming year.
Investors also shared a fairly robust view of lending and housing and saw
diminished event risks.
However, one area remains strained: employment. While investors see progress in
the labor markets, most believe the employment situation is worse than reported
in official statistics. This skepticism appears to be a key ingredient in
shaping the caution around the near-term ability of the U.S. economy to sustain
higher interest rates.
One-half of investors surveyed believe the unemployment rate is modestly worse
than reported and one-third say significantly worse.
The vast majority of investors attribute some GDP momentum to the wealth effect
? a combination of the considerable surge in the stock market over the past year
and appreciation in home prices.
Investors also believe home prices will appreciate further this year. Most
placed home price growth in a range of 2%-5%.
Among potential macro worries, they continue to see inflation as the least
worrying (74% considered it a low risk).
Across all event risks, in fact, no potential disrupter received significant
attention as a high risk ? this pointing to this year's calmer macro
Share repurchases, dividends, and mergers and acquisitions are still viewed as
leading uses of corporate cash.
The survey includes sector specific credit, issuance, and spread outlooks.
For full survey results, see "Calmer Macro Environment Fails to Move the Needle
on Investor Attachment to Low Interest Rates," dated April 9, 2014, available at