BofA May Global Fund Manager Survey says investors are bearish, Fed done, risk assets are resilient so long as the landing is soft.

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  CASH: BofA reports FMS cash levels at 5.6%, allocation to bonds is at a 14-year high, allocation to commodities is at a 3-year low.


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  GROWTH: BofA says global growth expectations are the worst in 2023, but majority of those surveyed are in soft-landing camp rather than a hard landing, or no landing (4%); BofA says this is corroborated by investors forecasting a tiny 1% drop in global EPS in next 12 months.


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  FED: The survey shows most think the Fed's hiking cycle over, and the first Fed rate cut is likely to be seen in January 2024. These expectations mean that forecasts for a steeper yield curve are now at a 2-year high.


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  RISKS: Survey participants see the biggest tail risks as: credit crunch/recession, high inflation/hawkish central banks, while CRE seen as most likely source of credit event.


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  DEBT CEILING: The vast majority of investors expect US debt ceiling resolution before “X-date.”


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  ASSET ALLOCATION: Allocation to stocks is creeping higher, and is now at a 5-month high; BofA notes a big rotation out of commodities, and into tech stocks (which is now at the highest since December 2021) as well as the Eurozone.


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  STYLES: Investors are the most long of growth stocks vs its value counterpart since July 2020.


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  CROWDED TRADES: The most crowded trades are seen as long big tech, short banks, short USD.


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  CONTRARIAN TRADES: Long REITs, banks and value stocks; short bonds, tech and growth.

16 May 2023 - 08:15- Fixed Income- Source: BofA