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Investors now fear inflation and the Fed more than Covid, Bank of America survey shows

Just over a year since Covid-19 turned the world upside down, investors are starting to get over it.

For the first time since the pandemic hit, respondents to the Bank of America Fund Manager Survey said the market faces bigger worries.

Inflation now has become the biggest “tail risk,” or outlier event, that could cause the most damage, the widely followed gauge of professional investors showed.

A total of 37% of respondents in the March survey cited that as the biggest challenge, followed by 35% for “taper tantrums” — sharp reactions in the bond market in the event the Federal Reserve unexpectedly pulled back on its monthly asset purchases.

A total of 220 investors with $630 billion in assets under management participated in the bank’s survey, which was conducted from March 5 through Thursday.

Though the coronavirus — specifically problems with the vaccine rollout — remains the third-biggest threat, it was cited by fewer than 15% of respondents, about half the February level.

March marked the first time Covid-related concerns didn’t top the survey since February 2020.

Those three concerns easily outdistanced a bubble on Wall Street, higher taxes or harsher regulation under the Biden administration.

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