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Risk Appetite Is Surging Again in Markets Seduced by Fed Hope

  • Hopes boosted by soft economic data and latest Fed minutes
  • Corporate credit inflows rise; quant equity exposure gains


Source: Moment RF/Getty Images

Under the surface of one of the quietest weeks on Wall Street all year, some money managers are renewing speculative bets, hoping against hope that a more friendly -- or at least less-hostile -- Fed, is back in their corner.

Sure, they’re getting ready to close out the worst year since the financial crisis. But a plucky optimism remains, and it’s showing up across a range of assets. A rush to corporate credit is favoring the riskier edges of the market, with junk bonds drawing their biggest passive inflows on record. Equity exposure among quants has turned positive and that of active fund managers is back near long-term averages. The inflation bid is crumbling, with the dollar heading for its steepest monthly decline since 2009 and benchmark Treasury yields down 30 basis points in November.