Investors More Bullish, Optimistic About a Soft Landing as Inflation Cools

Investors are growing more bullish and optimistic that the Federal Reserve’s rate hikes could bring about a soft landing as inflation cools, according to a survey by Morgan Stanley Wealth Management.

Over half of investors surveyed by Morgan Stanley expect the Fed will be able to make a soft landing as inflation cools.Close to half say that the economy is healthy enough for the Fed to enact additional rate hikes.

Close to half of respondents (48%) say that the economy is healthy enough for the Fed to enact additional rate hikes as Fed officials signal they could be gearing up to hikes rate again at next week’s policy meeting. So far, an overwhelming majority of traders believe the Fed will hike rates by 25 basis points  according to fed funds futures data collected by CME Group.

Top Sectors of Interest

As artificial intelligence  takes center stage in global awareness, technology topped sectors investors said they were interested in this quarter. Just over half of investors at 51% said they’re interested in investing opportunities in tech, a jump of 9 percentage points from last quarter.

The energy sector also stood out as one potentially offering the most bargains, with 43% of investors said they were interested in investing in the space. Meanwhile, healthcare continued to be viewed as defensive play, since it is relatively less sensitive to macroeconomic cycles and can offer relatively stable margins even during a recession.“We’re beginning to witness a slow shift happening in the investing landscape as we narrow in on the potential end to the Fed’s rate hike campaign, said Morgan Stanley Portfolio Solutions Head of Model Portfolio Construction Mike Loewengart in a release.