Traders, tormented by mounting pessimism, have sought refuge in money, in response to a current survey performed by Financial institution of America. The survey highlights a notable 5.6% improve in money reserves throughout Could, as apprehensive traders brace themselves for a possible credit score crunch and a recession.
Flight to Security: Traders Enhance Money Reserves and Brace for Recession
Traders are more and more gravitating in the direction of money reserves, as indicated by a current survey performed by BOFA, which characterizes this motion as a “flight to security” within the realm of monetary transactions. Notably, inventory publicity has attained its peak to this point in 2023, whereas BOFA additional highlights that bond allocations have reached their highest degree since 2009.
Between Could 5-11, BOFA’s researchers performed the survey by participating with over 250 international fund managers overseeing over $650 billion in belongings. In line with the BOFA ballot, sentiment is souring and taking a bearish flip, with issues looming over a potential recession and credit score disaster.
BofA's Fund Supervisor Survey's most “crowded trades”
lengthy massive tech (32%) brief banks (22%) brief US greenback (16%) pic.twitter.com/wQ1PNl5Q5U
— Jonathan Ferro (@FerroTV) Could 16, 2023
Roughly 65% of the worldwide fund managers surveyed expressed a perception within the chance of an financial downturn. On the subject of the U.S. debt ceiling, a big majority of the traders polled anticipate its improve by a particular date. Nonetheless, though most fund managers anticipate a decision, the proportion of traders holding such expectations has declined from 80% to 71%.
The survey notes traders are gripped by apprehension over the prospects of a world recession and the potential for an enormous rate of interest hike by the U.S. Federal Reserve as a way to quell persistent inflationary pressures.
Fund managers additionally harbor issues concerning escalating tensions amongst main nations and the danger of a contagion within the banking credit score system. As well as, BOFA’s analysis revealed essentially the most closely populated shares, with lengthy tech trades claiming the highest spot on the listing.
Among the many different crowded trades had been bets in opposition to the U.S. greenback and U.S. banks, whereas a considerable inflow into tech shares was witnessed, diverting consideration from commodities and utilities.
Will this shift in the direction of money reserves be sufficient to climate the storm, or are traders overlooking different potential alternatives? Share your ideas about this topic within the feedback part beneath.