IWM - Markets will face a 'rates shock' in 2022 - BofA

The next shock markets will have to brace for will involve rates and policymakers are already preparing to pivot, BofA Securities says. In 2020 there was a "growth shock" with "policy panic causing V-shape recovery" on Wall Street and then the economy, BofA strategists led by Michael Hartnett write in the weekly Flow Show note. The S&P (NYSEARCA:SPY), Dow (NYSEARCA:DIA), Nasdaq (NASDAQ:QQQ) and Russell 2000 (NYSEARCA:IWM) were the winners then. An "inflation shock" arrived in 2021, with demand for goods, services, labor and housing "up big" and "supply, not so much." Commodities and crypto were the 2021 winners. Next year there will be a "rates shock" as the "Fed hikes as monetary policy tightening spreads from EM to DM," Hartnett says. Next year's winners will likely be volatility and the U.S. dollar (USDOLLAR) in the first half, with stocks, credit and tech the losers, he says. And "policy makers & politicians

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Markets will face a 'rates shock' in 2022 - BofA