BofA Survey: Disorderly Bond Sell-Off Becomes Fund Managers' Top Tail Risk
nashnova research
BofA's monthly fund-manager survey shows a disorderly spike in bond yields has become the No. 1 tail risk among 170 respondents — net 49% are overweight equities, cash has risen to 3.9%, and risk appetite is fading.
What are fund managers most afraid of?
In the latest survey, a disorderly surge in bond yields replaced all other factors as the single biggest tail risk. In plain terms = managers fear a bond-market blowup dragging every asset class down more than they fear a recession.
A net 49% of managers are overweight global equities, down from 56% last month. This means → money is still in stocks, but conviction is draining — managers are pulling back.
Cash now makes up 3.9% of portfolios, yet BofA strategist Michael Hartnett noted this level still sits inside the zone that triggers a "sell signal" for risk assets.
Why is the bond sell-off so intense?
A net 48% of managers are underweight bonds — the highest since May 2022. This means → almost no one wants to hold fixed income; institutions are collectively fleeing the asset class.
Nearly half of respondents said the U.S. Treasury's bond buyback program will have no material effect on yields. In plain terms = the government played its "rescue" card, and the market shrugged.
The 10-year Treasury yield has climbed to its highest since 2007, while oil holds above $100 a barrel — inflation pressure keeps pushing long-end rates higher.
Has the Fed fallen behind the curve?
During the survey window, swap-market pricing put the probability of a Fed rate hike this week at roughly 94% — the first hike in three years.
Yet a net 25% of respondents said monetary policy is too loose, the highest share since 2022. This means → the consensus view is that the Fed is moving too slowly and inflation has already run ahead.
This reflects a core contradiction: the market is simultaneously betting the hike will land and believing that even after it does, it won't be enough.
How could earnings expectations and the election shake things up?
The share of respondents expecting double-digit earnings growth over the next 12 months is the highest since August 2021. Hartnett said investors are broadly optimistic on the macro outlook — their "only worry" is excessive corporate capital spending.
On the midterm elections, about 44% of respondents see a split outcome — Democrats controlling the House, Republicans the Senate — as most likely.
If Democrats sweep, nearly half expect bond yields to rise and equities to fall. In plain terms = the market reads a "blue wave" as a signal for more fiscal spending — and more spending = more Treasury supply = rates keep climbing.
What to watch next?
The survey covered 170 participants managing a combined $470 billion, a sample with institutional weight.
Two verification points lie ahead: whether bond yields can stabilize at elevated levels, and whether the Fed's rate path meets market expectations.
This means → if yields keep surging in disorderly fashion and the Fed can't keep pace with inflation, the current state — still in equities but increasingly uneasy — could tip quickly into full-scale risk-off.
市场有风险，内容仅供研究参考，不构成投资建议。