Bank of America’s September Global Fund Manager Survey (FMS) said global sentiment had improved for the first time since June on hopes of a soft landing for the US economy amid Fed rate cuts.
FMS investors lowered cash levels to 4.2 per cent from 4.3 per cent, with a soft landing forecast by 79 per cent of investors. Fifty two percent of FMS investors believe there will be no recession for the US economy in the next 18 months. Forty per cent of FMS investors view US recession as the biggest tail risk and net 42per cent, expected a weaker economy.
September saw FMS investor risk appetite at an 11-month low, with net 23per cent of investors saying that they would take lower than normal risk levels. Investors believe that global monetary policy is too restrictive, on par with levels last seen in the GFC and dotcom bubble. Ninety per cent of FMS investors think that yield curves will steepen, the most on record.
APAC ex-Japan economic outlook crashed to its weakest level in two years, with net 23 per cent of the participants seeing a weaker economy 12 months out versus net 22per cent seeing a stronger economy in August.
Macro pessimism was centered on China, with net 18per cent expecting a weaker Chinese economy and short China the most crowded trade. Japan (net 45 per cent overweight) remains the favorite market in the region, followed by India (25 per cent). China (-33 per cent) remains the most unloved.