Bank of America's September Global Fund Managers Survey: The number one risk is shifting to the bond market! US bond yields surpass the AI bubble, and cash positions rise

The Zhitong Finance App learned that Bank of America released the September 2026 Global Fund Manager Survey Report. The survey covered 190 institutional investors and managed a total of $512 billion in assets. The report shows that institutions are still optimistic about AI capital expenditure and global economic resilience, but the core risks of the market have changed, fund managers have slightly raised their cash positions, and risk appetite has declined. At the same time, they remain highly wary of the US midterm elections and fluctuations in US bond yields. Combining research data, interpret the current asset allocation logic and market warning signals of global institutions.

Macro resilience remains, and policy uncertainty is rising

Institutions as a whole maintain an optimistic judgment on the global economy. 55% of fund managers believe that the economy will continue to be “no landing”, 38% expect a soft landing, and only 2% anticipate a hard landing. Many investors are optimistic that corporate profits will achieve double-digit growth in the next 12 months. However, market concerns have also accumulated at the same time. Net 33% of respondents believe that companies are currently overinvesting, which is a record high; half of the institutions predict that the global economy may stagnate.

Monetary policy expectations have changed markedly. More and more investors believe that short-term interest rates still have room to rise. Net 36% of respondents expect short-term interest rates to rise, the highest since September 2022. Market expectations for the Fed's policy were quickly revised. 41% of fund managers believe that the Fed may raise interest rates before the US midterm elections in November, a sharp increase from 22% in August. Regarding the Treasury's treasury bond repurchase plan, nearly 70% of institutions judged that the policy would be difficult to reduce US bond yields, and the risk of bond market disturbances cannot be ignored.

Risk focus has changed, and AI capital expenditure resilience is still promising

The biggest tail risk in the market rotated, and the disorderly upward trend in US bond yields (33%) surpassed the AI bubble and became the number one risk in the eyes of institutions. Meanwhile, large AI companies' huge capital expenditure is seen as the most likely source of a systemic credit incident, accounting for 42%.

Despite risk concerns, institutions still believe that AI capital expenditure is resilient, and 79% of fund managers judge that AI hyperscale vendors will not cut capital expenses within 2026. At the transaction level, going long on global semiconductors is still the most crowded deal, accounting for 53%. The report suggests reverse trading ideas: go long on the UK stock market and short US stocks; if you want to go long, you need to spend and short banks; go long on small-cap stocks and short large-cap stocks.

The US midterm elections have become an important variable. 44% of institutions expect the Senate and House of Representatives to split; expectations of the Democratic Party's overall victory rise to 31%. 45% of investors believe that “US bond yields will rise and the stock market will fall” under this scenario.

Institutional adjustment: increasing the allocation cycle and finance, abandoning traditional defense sectors

On the asset side, fund managers' cash ratio increased from 3.5% to 3.9%, and Bank of America's cash signal is still in the “selling range”. Institutions suggest that only a return of cash to a neutral range of 4 to 5% is suitable for further increasing risky assets. The bond allocation remained drastically low, with 48% of the net institutional low allocation of bonds, the lowest since May 2022. The overall equity balance remained overallocated, but positions declined somewhat from August.

There was a clear rotation at the industry level, with large inflows of capital into the banking, healthcare, and industrial sectors. The overallocation ratio in the banking sector rose to a high since November 2025; health care received a significant increase in positions. In contrast to this, essential consumer goods positions in the traditional defense sector were drastically reduced, with a net underallocation of 33%, the lowest level since January 2004. REITs were also reduced by institutions. Regionally, institutions overcapitalize on emerging markets and US stocks, and continue to be underrepresented in the UK stock market.

Taken together, the agency is not completely bearish on the growth and AI circuit, but it has begun to make a defensive layout. On the one hand, they acknowledge the boom in AI capital expenditure; on the other hand, they are wary of credit risks brought about by high investment, and at the same time, fluctuations in the bond market are listed as the primary target to be wary of. Stylistically, institutions abandoned traditional defensive consumption and switched to finance, healthcare, and industry, reflecting a comprehensive trade-off of the interest rate environment and economic cycle. In the future, we need to focus on tracking US bond yield trends, the Federal Reserve's policy path, and the US midterm election results. These variables will determine the future direction of global risk assets.