— Sentiment Back at “pre-Liberation Day ‘Goldilocks bull’” Levels
By Vicki Schmelzer
NEW YORK (MaceNews) – Global investor sentiment recovered in June as trade and recession jitters faded further, according to BofA Global Research’s monthly fund manager survey, released Tuesday.
Sentiment toward the global economy, recession and inflation was back at “pre-Liberation Day ‘Goldilocks bull’ levels” because of overall reduced angst, the survey said.
This month’s survey was taken June 6-12, “after the latest US-China trade developments, but before the surge in geopolitical risk in the Middle East,” BoA Global noted.
A net 46% of those polled in June looked for a weaker global economy in the coming months. This compared with a net 59% looking for more weakness in May and a net 82% looking for weakness in April, the “most on record” (30-year history), the survey said.
A net 66% of managers now look for a “soft landing” in the next year, vs. a net 61% in May and a net 37% in April. A net 13% now see a “hard landing” in the coming year versus a net 26% in May and a net 49% in April.
Inflation fears were greatly reduced also in June, with a net 13% of portfolio managers looking for higher global inflation in the next 12 months. This is down from a net 30% in May and a net 57% looking for higher inflation in April.
Cash levels fell to 4.2% in June, down from 4.5% in May and 4.8% in April. These levels compare to 3.5% in February, which was the lowest level since 2010.
Cash allocation stood at a net 16% overweight this month, compared to a net 26% overweight in May and a net 25% overweight in April.
In terms of asset allocation, global investors slowly dipped their toes into riskier instruments.
In June, a net 2% of portfolio managers were underweight global equities, versus a net 13% underweight in May and a net 17% underweight in April. In March, there was a net 6% overweight.
A net 5% of those polled were underweight bonds, versus a net 1% underweight in May and a net 17% overweight in April.
Allocation to real estate stood at a net 12% underweight in June, versus a net 8% underweight in May and a net 11% underweight in April.
Commodity allocation rose to a net 9% overweight from a net 2% overweight in May and compared to a net 8% underweight in April.
In terms of regional equity allocation this month, most areas saw only modest tweaks.
Allocation to U.S. equities held at a net 36% underweight in June, improved from a net 38% underweight in May and back at April levels.
This month, a net 34% of those polled were overweight eurozone stocks, compared to a net 35% overweight in May and a net 22% overweight in April.
Allocation to global emerging markets (GEM) rose to a net 28% overweight in June, compared to a net 11% overweight in May and a net 16% overweight in April.
This month, allocation to Japanese equities stood at a net 6% underweight versus a a net 7% underweight in May, while UK allocation was unchanged at a net 4% underweight.
This month, the three biggest “tail risks” seen by managers were: “Trade war triggers global recession” (47% of those polled), “Inflation causes Fed to hike” (17%), and “Credit event driven by disorderly rise in bond yields” (16%).
Last month, the three biggest “tail risks” were: “Trade war triggers global recession” (62% of those polled), “Inflation causes Fed to hike” (15%), and “U.S. dollar crash on international buyers strike” (14%).
In June, the three “most crowded” trades were seen as “Long Gold” (41% of those polled), “Long Magnificent 7” (23%) and “Short US Dollar” (20%).
In May, the three “most crowded” trades were deemed “Long Gold” (58% of those polled), “Long Magnificent 7” (22%) and “Long EU stocks (11%).”
Note: the term “Magnificent Seven” was coined by Bank of America’s chief investment strategist Michael Hartnett, referring to a basket of the seven major tech stocks: Apple, Microsoft, Amazon, NVIDIA, Alphabet, Tesla and Meta.
This month, there were special questions about a potential U.S. tariff rate and the impact of the “Big Beautiful Bill” (BBB) currently being discussed by U.S. lawmakers.
On trade, 77% of those polled look for a duty rate of below 82%, with only 1% anticipating a 30% plus rate. “Altogether, the weighted average U.S. tariff rate is expected at 13%,” BofA Global said.
In terms of the “Big Beautiful Bill” and its possible impact on GDP growth in the second half of 2025, “59% of FMS investors expect no boost to economic activity in the next 6 months,” the survey said.
In addition, 81% of managers see the U.S. government budget deficit rising as a result of the impact of the “BBB”, while 13% see a neutral impact and 3% look for the “BBB” to decrease the U.S. deficit.
An overall total of 222 panelists, with $587 billion in assets under management, participated in the BofA Global Research fund manager survey, taken June 6 to June 12, 2025. “190 participants with $523bn AUM responded to the Global FMS questions and 110 participants with $229bn AUM responded to the Regional FMS questions,” BofA Global said.
Contact this reporter: vicki@macenews.com