‘Taper tantrum’ worries creeping in, but equity crash not imminent

BANK OF AMERICA

‘Taper tantrum’ worries creeping in, but equity crash not imminent

BANK OF AMERICA DOWN 0.50% AT 37.75

Investors have slightly increased their cash allocation, deeming that inflation and ‘taper tantrums’ could topple the record rally in financial markets, BofA’s March fund manager survey showed on Tuesday.

Unprecedented stimulus measures have sparked worries about inflation, driving U.S. 10-year borrowing costs to more than one-year highs of 1.62%. It has dovetailed with concerns that central banks might start withdrawing or “tapering” their support.

Fund managers asked by BofA increased their cash allocation to 4% from 3.8% in February.

A rise above 2% in U.S. 10-year Treasury yield could cause more than a 10% correction in stocks, 43% of investors surveyed by BofA with $630 billion in assets under management said. And a rise to 2.5% could make bonds attractive relative to stocks.

Though the quickfire bond selloff in the last few weeks dented tech stocks wiping hundreds of billions from the sector’s market capitalisation, ‘long tech’ remained the most crowded trade in the survey.

On technical fronts BANK OF AMERICA RSI stood at 67.69 and currently stock is trading above all Moving Averages. So, BUY position can be taken with following target and stoploss.

TRADE SIGNAL -: BANK OF AMERICA – BUY: 37.73, TARGET: 37.97, STOP LOSS: 37.52

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