(Bloomberg) — Appetite for longer-dated US bonds has shot up since the Federal Reserve signaled interest-rate hikes are unlikely, laying the groundwork for cuts later this year, according to a Bank of America client survey.Â
A gauge of investors’ desire to extend duration in their portfolios has climbed to the highest in a year and is near its most-elevated level since the US bank started conducting the survey in 2011. Investors typically avoid long duration, which measures a bond’s sensitivity to interest-rate changes, during times of monetary-policy uncertainty.
The change in sentiment suggests money managers are more comfortable betting the Fed will cut rates later this year since Chair Jerome Powell last week struck a less hawkish tone than some had feared. A soft reading for US jobs has also emboldened the view, with bond traders pulling forward their expectations for the Fed’s first interest-rate cut by one month to…
