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(Kitco News) Investor sentiment is deteriorating by the minute as tighter credit conditions and recession fears are driving investors toward cash, according to the Bank of America Corp.'s survey. The poll also revealed May's most crowded trades.
The mood of global fund managers hit the most pessimistic levels so far this year, with 65% of respondents projecting a weaker economy, the BofA survey said.
But despite the worries, nearly two-thirds of respondents still hoped for a "soft landing" scenario this year.
Looking into the details, BofA said cash levels climbed to 5.6%, equity exposure hit the highest levels of 2023, and bond allocations rose to levels not seen since 2009.
Top risks included tighter credit conditions, global recession, a surprise hawkish pivot by central banks due to stubborn inflation, more geopolitical tensions, and a credit contagion event.
With the June 1 deadline nearing, those expecting a debt ceiling resolution dropped from 80% to 71%, the survey showed.
Many stock investors turned to technology in a "flight to safety," with the sector seeing the highest two-month activity since the global financial crisis.
Right now, the long tech trade is the most crowded, BofA pointed out. Other overcrowded trades include the U.S. bank short, the U.S. dollar short, European and China equities long, and T-bills long.
There was also an exit from commodities and utilities in favor of the tech sector.
BofA's survey polled over 250 investors with more than $650 billion under management between May 5-11.