Global fund managers remain bearish despite bets on a soft landing
Long Big Tech was the most crowded trade in July (59%).
According to the Bank of America Global Fund Manager survey for July, 60% of investors expect weaker global growth in the next twelve months, with the vast majority (68%) forecasting a soft landing rather than a hard landing (21%).
Nearly half (48%) of investors surveyed predict the start of global recession by the end of Q1 2024, while 25% expect the start at the end of this year. However, a rising number of respondents (19%) forecast no global recession in the next 18 months, up from 14% in June.
The survey found that the best of the news on lower inflation and lower short-term interest rates is largely behind us, as expectations on inflation and rates are no longer falling.
BofA: European managers remain 'downbeat on growth'
Investors expect the Federal Reserve to start cutting interest rates in H1 2024, but timing now skews toward Q2 2024 (29%) versus Q1 2024 (27%).
The five biggest tail risks in July were that high inflation keeps central banks hawkish (45%), a bank credit crunch and global recession (18%), worsening geopolitics (15%), an AI/tech bubble (11%) and a systemic credit event (10%).
Based on cash positions, equity allocation and economic growth expectations, sentiment among investors is still stubbornly low. Fund managers remain underweight global stocks, but by the smallest amount year-to-date — a net 24%.
Fixed income in H1: 'Year of the bond' looks more like 'year of the coupon'
Long Big Tech was the most crowded trade in July (59%), followed by long Japan equities (14%), short China equities (8%), long T-Bills (5%), short US dollar (5%) and short US banks (2%).
Relative to the past 20 years, investors are long bonds, staples, EUR, and
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