S&P 500 peak, 10% correction, credit spreads tightening: BofAML's top ten macro calls for 2018

Markets driven by sentiment rather than fundamentals

BofA Merrill Lynch (BofAML) global research team has said returns are still to be made as we enter the later stages of the current bull market, but warned of an "aggressive downgrade of risk assets once profits peak".

The team predicted 2018 could be the year of "euphoria" as sentiment had become a more important driver of the S&P 500 than fundamentals, meaning there was still potential for equities to grind higher. Candace Browning, head of BofA Merrill Lynch Global Research, said: "We have entered the later stage of a long bull market, a phase of positive and improving economic growth that favors strong momentum and growth but also higher risk. "History suggests that some of the best returns can come at the end of bull markets." However, the team said they are "macro bullish" and "market beari...