BofA Warns of Risky Bond Moves as Investor Sentiment Shifts
Bank of America's latest survey indicates that investor enthusiasm for risk assets is waning due to concerns over a disorderly rise in bond yields and the upcoming U.S. midterm elections. The report shows a net 49% of fund managers are overweight global equities, down from 56% last month, with cash holdings rising to 3.9%, signaling caution toward risk assets. The survey highlights that investors now see an uncontrolled increase in bond yields as the biggest tail risk for markets. The U.S. Treasury's 10-year yield has climbed above key levels amid inflation and supply concerns, reaching its highest since 2007. Despite this, some market forecasters remain optimistic about equities absorbing higher rates due to a resilient economy. BofA strategist Michael Hartnett noted that investors believe the Federal Reserve is lagging behind economic developments, with many expecting monetary policy to be too stimulative. The survey also revealed mixed expectations regarding Treasury's buyback program and potential impacts on yields.
Tickers: $BAC
Topics: bond markets Federal Reserve policy investor behavior US Treasury yield