Fund managers 'most upbeat' since January 2022 but growth expectations remain pessimistic
Growth expectations among fund managers remained pessimistic, BofA found, although improved in the December survey from net 57% to 50% expecting a weaker economy.
The bank found sentiment improved to its «least bearish level» in nearly two years in December, from 2.5 to 3.4, while cash levels have continued to drop this month, down from 4.7% in November to 4.5%, and 5.3% in October.
Yet growth expectations among fund managers remained pessimistic, although had improved in the December survey from a net 57% to 50% expecting a weaker economy.
In terms of economic outlook, most managers (66%) forecast a soft landing for the global economy, while 23% expected a hard landing.
UK inflation falls further than expected in November to 3.9%
When asked about the US economy, 36% said they did not foresee a recession in the next 12 months, in contrast with 32% of respondents who expected the US to fall into a recession in the second quarter of 2024.
Fund managers claimed Chinese real estate was the «most likely source for a systemic credit event», at 29%, up from 18%, replacing US commercial real estate (25%) in the top spot.
However, an increasing number of investors have flagged the US shadow banking sector as a potential source for a credit event.
Around 80% of fund managers claimed inflation will be lower in the coming months, with 89% forecasting short-term rates will be lower in the next year, and 91% predicting the Fed has «finished its rate-hiking cycle».
When asked about the biggest tail risks, fund managers placed a global recession and the risk of a hard landing as the biggest risk (32%), followed by high inflation (27%), worsening geopolitics (17%), a systemic credit event (9%), the US election (7%) and a potential
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