Bank of America on Tuesday released the April fund manager survey, fund managers increased cash allocations, because of the expected rise in inflation, tax changes and “cut panic (taper tantrum)” may make the stock market retreat risk.
Although the majority of investors surveyed said the stock market does not have a bubble, but the Bank of America said that nearly 62% of investors “plus” stocks, positions have reached a high point.
National authorities in response to the recession triggered by the epidemic, the introduction of unprecedented stimulus policies, these policies have now triggered inflationary concerns and prompted investors to raise their expectations for interest rate increases.
Concerns that the U.S. Federal Reserve (Fed/FED) may taper its quantitative easing (QE) program are the biggest risk perceived by investors.
Discussions over the past few weeks about the world’s lowest corporate tax rate and an increase in the U.S. corporate tax rate have weighed on the stock market outlook.
The survey showed that investors’ cash allocation rose to 4.1% last week, compared with 3.8% in February.
Global equities are now holding near record highs, soaring 82% from March 2020 lows, with market capitalization up $90 trillion.
Two-thirds of fund managers surveyed, however, said U.S. equities are in the late stages of a bull market. Only 7 percent believe the U.S. stock market is in a bubble.
Sixty percent of respondents expect short-term interest rates to rise in the next 12 months, the highest percentage since January 2019. However, they expect the stock market to see a pullback of more than 10% if the 10-year U.S. bond yield breaks above 2.1%.
The 10-year U.S. bond yield is currently near 1.70%, holding below the 14-month high of 1.776% reached on March 30.
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