Investor sentiment has jumped in July to the most bullish since February, driven by the optimism of the biggest leap in five years and a record of the surge in risk, a survey of the Bank of America’s global fund manager showed.
The level of cash fell to 3.9% in July, low which triggered the “selling signal” of in-house from an investment bank strategist.
In a record issued on Tuesday, Bofa said the survey showed a rather enthusiastic sentiment, or “toppy”, but the overweight position of the funds manager in shares was not yet at the extreme level and the volatility of the bond market remained low.
“Greed is always far more difficult to be reversed than fear,” said bank analyst, adding that investors are more likely to stick to “summer of hedge and rotation” rather than lying on large short bets or withdrawing from the market altogether.
S&P 500 SPX has reached the highest record this month, while cash has also flowed to Bitcoin BTCusd, because investors work on the assumption that US President Donald Trump will not improve its threat to impose large tariffs on the main trading partner on the new deadline of 1 August.
The steps for volatility for stocks, bonds and currencies are still being muted, showing there is a slight panic to protect or shift, as evidenced by the BOFA survey, which surrenders 211 funds managers with $ 504 billion managed.
The bond market has seen pressure, especially in old debt, because investors are preparing to increase loans and government spending. The Treasury US market has additional pressure from Trump’s repeated threat to remove the chairman of Federal Reserve Jerome Powell, because he believes the US tariff must be lower.
BOFA survey shows 81% estimates one or two decreased levels at the end of the year.
“Asked who is the most likely to be the next FED chairman: 26% said BESSENT, 17% WARSH, 14% Waller, 7% Hassett,” Bofa said, referring to the Treasury Secretary of Scott Bessent, former Fed Governor Kevin Warsh, each of the Fed Christopher Waller Governor and Economic Advisor Kevin Hassett.
In the currency, the survey showed that the Dana Manager held their biggest overweight position in the Euro since January 2005. Euro Eurusd has become the main beneficiary of investors flowing out of the US dollar this year, after gaining nearly 13% this year to around the highest in almost four years.
Those surveyed said they believed that the short dollar trading was the most crowded at the moment, although the proportion of investors who were willing to protect the dollar down to 33% from 39%, which would suggest a small amount of thinking of US currencies had fallen further.
Source: Reuters
