According to the latest MLIV Pulse survey, professional investors and do-it-yourself traders are sharply divided over the best way to position ahead of the Federal Reserve’s rate decision on Wednesday, reported Bloomberg.
The top responses showed that 37% of retail investors believed owning U.S. stocks is the best trade ahead of the central bank decision, while 40% of professional investors stated it’s better to short them, the report said.
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Major Wall Street indices closed in the red on Friday following the release of a higher-than-expected producers' price index reading. All attention turned towards the consumer price inflation set to be released on Tuesday and the crucial FOMC meeting where the Federal Reserve is expected to hike its policy rates by 50 basis points on Wednesday. The SPDR S&P 500 ETF Trust SPY closed 0.75% lower on Friday while the Vanguard Total Bond Market Index Fund ETF BND ended 0.58% lower.
Professional investors believe that, alongside stocks, high-grade corporate credit stood the most chance to gain after a 50-basis-point hike. Retail traders' No. 2 pick was long-dated Treasuries, which have surged sharply in recent weeks, the report said. Almost two-thirds of investors surveyed supported the possibility of a mild U.S. recession next year.
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