European investors bullish on US fiscal cliff – Fitch

European investors expect the US fiscal cliff to be avoided, according to Fitch Rating’s latest quarterly investor survey.

Instead, investors in the region feel confident that US politicians will do what is necessary to solve the crisis.

Fitch said that 82% of those surveyed believe the cliff “will ultimately be avoided”.
Just 5% of those surveyed fear the cliff will trigger a US recession, in turn hitting the global economy.

Fitch commented on Wednesday following the re-election of president Barack Obama that the fiscal cliff is probably the most pressing issue facing the legislative (Congress) and administrative (White House) branches of the US government.

If it were allowed to happen, Fitch estimates that it would tip the US economy into recession, and increase the unemployment rate to 10% in 2013.

It is also important for the country to avoid the cliff if it wants to retain its ‘AAA’ status. Failure “would probably result in a sovereign rating downgrade by Fitch”.

The Q4 2012 survey was conducted between 2 October and 6 November, and represents the views of managers of an estimated $7.4trn of fixed-income assets.

Fitch will publish the full survey results in mid-November.


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