In the latest survey of BofA’s global fund managers (FMS), 84% of them expect the Federal Reserve to signal a slowdown by the end of the year. Even global growth expectations fell drastically and FMS increased liquidity levels to 4.2% in August.
“Twenty-eight percent of investors expect the Fed to signal a slowdown in Jackson Hole, 33 percent of investors believe the September Federal Open Market Committee (FOMC), while 23 percent of investors are thinking about the fourth quarter of 2021. Note that the timing of the first-rate hike has been pushed back to 2023, ”the report said.
The BofA survey was conducted between August 6 and 12 with more than 250 panelists representing $ 749 billion in assets under management (AUM). Global growth expectations have dropped drastically. Economic growth expectations for August are now at a net level of 27%, the lowest since April 20 and down from the peak of 91% in March 21.
Growth and inflation have fallen sharply, but FMS investors do not believe a recession will occur. A smaller majority of FMS investors also think inflation is transient at 65 percent while only 32 percent say inflation is permanent.
The biggest risk perceived by fund managers (before the debacle in Afghanistan) was emerging market risk (due to China) and currency risk (due to tapering). However, the report also states that a few days after the investigation was closed, the geopolitical situation in Afghanistan seriously deteriorated.
FMS investors became slightly more defensive in August with an increase in healthcare, insurance, utilities and cash. They also slightly reduced their exposure to inflation in commodities, commodities, emerging markets and energy.