Investor confidence rallies on potential Fed rate cuts – BofA

Global investor sentiment improved in September for the first time since June, driven by optimism over a potential soft landing and interest rate cuts by the US Federal Reserve, according to a Bank of America (BofA) survey released on Tuesday.

The survey revealed that cash allocations fell to 4.2 per cent as investors shifted towards bond-sensitive assets, leading to the highest overweight allocation to utilities since 2008, while commodity exposure dropped to a seven-year low.

BofA described investors as “nervous bulls,” with 52 per cent of respondents believing the US economy will avoid a recession in the next 18 months.

The survey, conducted between September 6 and 12, with 243 fund managers overseeing $666 billion in assets, also showed that six out of ten respondents felt interest rates were too restrictive, the highest level in 16 years.