Optimistic mood is bursting! According to the latest survey by Bank of America, the global fund managers' equity allocation in May hit a record high, with only 4% worrying about a hard landing.

According to the monthly fund manager survey released by Bank of America on Tuesday, global fund managers significantly increased their stock holdings in May, reaching a historical record high in overallocation ratio, boosted by positive expectations for profit growth and the possibility of a Federal Reserve rate cut. Benefitting from strong corporate earnings reports and optimism about the prospects of large-scale investments in the field of artificial intelligence (AI), global stock markets continued to surpass historical highs in May. Despite international oil prices staying above $100 per barrel and the stalemate in US-Iran negotiations dragging down global bond markets, stocks continued to rise against the odds. Data shows that a net 50% of fund managers chose to "overweight" stocks, a significant increase from 13% the previous month; institutional average cash holdings decreased from 4.3% to 3.9%. Only 4% of respondents expect a scenario of significant economic contraction in tandem with a sharp decline in employment, while as many as 39% believe that the economy will remain stable without a hard landing. The Bank of America survey was conducted from May 8th to 14th, interviewing a total of 200 surveyed asset management professionals with a combined total assets under management of $517 billion. Market downturn after the survey However, it is worth noting that since the survey ended on May 14th, global financial markets have undergone dramatic changes. The latest inflation data in the US exceeded expectations across the board, with the year-on-year core CPI increase rising to 3.8%, indicating that the tail risk of the "second inflation" that 40% of respondents were most concerned about in the survey seems to be materializing. The resurgence of inflation has completely shattered the market's expectations of a Fed rate cut by the end of the year. According to the latest data from the CME "FedWatch" tool, the market has largely ruled out the possibility of a rate cut by the Fed before the end of the year, with a probability of at least a 25 basis point rate hike by December at 39%. As a result, global stock markets have seen significant declines, with the S&P 500 index falling more than 2% from its peak on May 14th, and the Nasdaq index dropping by over 3%, led by technology stocks. Meanwhile, the 30-year US Treasury bond yield has surged rapidly, approaching the 6% target mentioned by 62% of respondents in the survey. Only 20% of respondents predict that the yield will fall back to 4%. The tension in the Strait of Hormuz, which was hoped to be resolved in the short term, has also escalated in recent days. The survey shows that 66% of respondents believe that the shipping tension in the Strait of Hormuz will ease in the coming months. It is reported that Trump had threatened earlier to leave Iran with nothing if they do not take swift action, although he later claimed to have ordered a postponement of the military strike against Iran "scheduled for the 19th". However, he also asked the US military to be prepared, ready to launch a "comprehensive, large-scale" attack against Iran if a satisfactory agreement cannot be reached.