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May 19, 2021 at 04:30 PM
What You Need to Know
- A net 84% of survey participants said they expect a stronger global economy in the next 12 months.
- Investors said their top tail risk was inflation, followed by a taper tantrum.
- Investors moved their expectations of a Fed rate increase forward two months, to November 2022.
Investor sentiment is “unambiguously” bullish, according to the latest global fund manager survey from Bank of America Global Research.
A net 84% of survey participants said they expect a stronger global economy in the next 12 months, down 6 percentage points from the April survey but still near record highs.
The survey was conducted May 7 to May 13 among 216 investors with $625 billion in assets under management.
BofA noted that the fund manager survey has recorded five episodes of peak optimism since 1994 that were followed by a 75-point drop in the Treasury yield, but that today the Federal Reserve’s policy stance is different. So “uber-easy,” in fact, that investors’ top tail risk in the May survey was inflation, cited by 35% of respondents, followed by a taper tantrum, cited by 27%.
A year ago, the coronavirus was investors’ No. 1 tail risk.
Over the next 12 months, 69% of investors expect above-trend growth and above-trend inflation, up 12 points month-over-month and the highest-ever reading.
A net 78% of investors expect global profits to improve over the next 12 months, also down 6 points but still near all-time highs.
Investors in the new survey moved their expectations of a Federal Reserve rate increase forward two months, to November 2022, driven by a big jump in the number of respondents who think an increase is likely in the first half of 2022, now at 21%, an 11-point increase from April.
