Bond exchange traded funds gained on Wednesday as investors cut exposure to risk assets in anticipation of changes to the easy money supply.

Emily Roland, co-chief investment strategist at John Hancock Investment Management, warned that we won’t get the same boost next year as we did in 2021, and investors will have to re-evaluate their risk exposure without benefits like stimulus checks and supportive post-pandemic policies, the Wall Street Journal reports.

“Don’t get too comfortable in the fast lane,” Roland said. “Next year, we just don’t see the highest-risk parts of the market leading, and we’re actually looking to trim risk into spring.”

Meanwhile, despite strong earnings out of retailers, with many brushing off concerns over rising consumer prices, investors remain focused on the elevated inflation levels. Many are concerned about how the increase in prices could hurt growth and push the Federal Reserve to tighten its policy sooner rather than later.

“The inflation fear is still there and those keep creeping in and discussion that we’re having of – is it transitory, is it supply driven – that’s still in the market,” Joe Saluzzi, co-manager of trading at Themis Trading, told Reuters.

“The Fed will hold as long as they can … But if (inflation) continues to go higher, and you continue to see inflationary pressure, then it becomes a question of how many and how often will (rates) rise,” Saluzzi added.

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