–US Treasury 10-year Yields Not Yet High Enough to Spur Big Shift from Stocks to Bonds; 6% Seen as Tipping Point
By Vicki Schmelzer
NEW YORK (MaceNews) – Lower growth and lower inflation expectations led to a modest tweaking of invest asset allocations in October, according to the latest BofA Global Fund Managers survey released Tuesday.
This month, a net 4% of investors looked for weaker economic growth in the coming 12 months. This contrasts with a net 8% who looked for stronger growth in September and a net 14% who looked for stronger growth in August.
A net 5% looked for lower inflation in the coming year, versus a net 4% looking for lower global CPI in September and in compared to August when a net 3% looked for higher CPI.
In October, portfolio managers made only modest changes to their holdings.
Cash levels held steady at 3.9% of assets under management. This is up from an “uber-low” of 3.5% in August.
Cash allocation was again “equal weight” in October versus a net 2% underweight in August.
This month, a net 44% of portfolio managers were overweight global equities, compared to a net 49% overweight in September and a net 56% overweight in August.
A net 37% of managers were underweight bonds in October, versus a net 48% underweight in September and a net 39% underweight in August.
Allocation to real estate stood at a net 22% underweight this month, compared toa net 21% underweight in September and a net 7% underweight in August.
In October, commodity allocation edged up to a net 21% overweight from a net 19% overweight in September. This compared to the net 24% overweight seen in August.
In terms of regional equities, global investors reduced U.S., eurozone and emerging market holdings, while increasing Japanese and UK assets.
Allocation to U.S. equities decreased to net 11% overweight in October. This compared to a net 25% overweight in September and a net 27% overweight in August.
A net 8% of those polled in October were underweight eurozone stocks. This compared to a net 5% underweight in September and a net 6% overweight in August.
This month, allocation to global emerging markets (GEM) fell to a net 34% overweight from a net 38% overweight in Spetember and was back at August levels.
In October, allocation to Japanese equities rose to a net 9% overweight from a net 1% underweight in September and compared to a net 1% overweight in August, while UK allocation improved to a net 26% underweight from a net 35% underweight in September and a net 33% underweight in August.
The three biggest “tail risks” seen by managers this month were: “Disorderly rise in bond yields” (31% of those polled), “AI bubble” (23%), and “2nd wave of inflation” (20%).
In September, the three biggest ‘tail risks” seen by managers in September were: “Disorderly rise in bond yields” (33% of those polled), “AI bubble” (28%) and “2nd wave of inflation” (24%).
In October, fund managers viewed the three “most crowded” trades as: “Long global semiconductors” (45% of those polled), “Short Treasuries” (27%) and “Long Magnificent 7” (16%).
In September, fund managers viewed the three “most crowded” trades as: “Long global semiconductors” (53% of those polled), “Short Treasuries” (18%) and “Long Magnificent 7” (7%).
As a reminder, in July, 82% of fund managers polled, a new record, saw “Long global semiconductors” as the “most crowded” trade.
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.
In a special question on the month, managers were asked if the U.S. Federal Reserve would raise interest rates before U.S. mid-term elections in November.
In the October survey, 76% said “No,” while 21% said “Yes.”
Another special question asked what level in the 10-year U.S. Treasury yield would cause asset allocators to shift allocation from stocks to bonds.
In response, 37% said 6.0%, 19% said “already at levels to prompt shift,” 19% said 6.5%, 5.5% said 12% and 8% said “7% or higher.”
An overall total of 185 panelists with $512bn in AUM participated in the BofA Global Research fund manager survey, taken October 2 to October 8, 2026.
Contact this reporter: vickischmelzer@gmail.com