Fund managers are showing their strongest optimism since February, with low cash holdings and growing confidence in the global economic outlook, according to a Bank of America (BofA) survey.
The bank’s analysts, led by Michael Hartnett, noted that concerns over U.S. trade policies triggering a broader economic slowdown are easing.
The survey revealed that more than 47% of participants expect the Federal Reserve to implement a series of four or more interest rate cuts in the near term. Markets are pricing in a nearly certain 25-basis-point reduction at the Fed’s upcoming policy meeting on Wednesday, with a smaller chance of a larger half-point cut. Lower rates are seen as a way to support investment and hiring, though they carry the risk of increased inflationary pressures.
Growth expectations among respondents have surged to their highest level since October, with around two-thirds anticipating a “soft landing” for the U.S. economy—where inflation is controlled without triggering a recession.
In terms of portfolio positioning, the proportion of fund managers overweight global equities has reached a seven-month peak, despite 58% noting that U.S. stocks, which recently hit record highs, appear overvalued.
Investors have reduced long positions in emerging-market and European equities, covered U.S. short positions, and increased exposure to sectors including technology, banking, and healthcare, the survey indicated.
The upbeat sentiment follows a rebound in U.S. stocks after a sharp dip in early April, when President Donald Trump introduced sweeping “reciprocal” tariffs. The S&P 500 has gained more than 12% so far this year, supported by clearer trade policy signals, expectations of Fed rate cuts, and growing enthusiasm around artificial intelligence opportunities.
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