Donald Trump’s war with Iran triggered a surge in a survey measure of professional investors’ inflation expectations. The same poll showed a marked deterioration in asset allocators’ growth outlook.
Those were the main takeaways from the April edition of BofA’s closely-watched Global Fund Manager poll, released on Tuesday.
The figure on the left, below, shows the jump in those expecting higher inflation — and a concurrent increase in the net share who expect higher short rates. That latter metric is now in positive territory, which is to say investors have priced out rate cuts.
As the figure on the right shows, global growth expectations, which had moved solidly into net positive territory, plunged to -36%, the lowest in eight months.
It wasn’t all bad news. Cash levels were steady at 4.3%. Although that’s the highest since May, it’s not “high” in any historical sense.
While the share of panelists who said “hard landing” is the most likely outcome for the global economy was the highest since September, “high” is a relative term there too: That share’s just 9%, even after tripling this year.
The figure below shows the survey’s overall sentiment metric. It rolls up cash levels, stock allocations and global growth expectations.
Although the measure fell nearly two full points in April from March, it’s not in disaster territory.
BofA’s Michael Hartnett called this “the most bearish Fund Manager Survey since June 2025,” but said the precipitous drop in growth expectations and the most onerous subjective inflation outlook since March of 2022 may be “contrarian positive for risk assets so long as the ceasefire sends oil prices below $84/bbl.”
I could tell a blockade joke, but they all seem too obvious.
Is there a point at which the landing (hard/soft/etc) is considered completed? The whole landing narrative gained popularity ca 2022 and it comes up now and then in 2026… just wondering of that plane ever lands and we call the landing for what it actually is.
Well, despite what the professional managers are saying in the professional surveys, since April 1 the market has been on a pretty good upward swing. Somebody is buying.
McElligot explained that last week. The machines are buying once again.
Can you recommend a book that explains your sentence in more detail? Hopefully, written at a basic level that I could understand. 🙂
Hello. Sadly I cannot. I learned option pricing by doing it professionally. And trying to do so and being scolded by smarter people than I.
That said, our Dear Leader here has posted informative explanations in a number of posts here.
C-Turtle. Hope I did not come across as snarky. I was introduced to options in a B-school Investments class in 1982. At that time it made me a little unique when I returned to the world of trading. So I was slotted into the nascent FX options trading options desks at my first post B-school job. Just because I understood the products at a really rudimentary level. So I learned a little more by doing it and later at another firm.
The models McElligot and others refer to are driven by market volatility measures. Which are part & parcel of options pricing and hedging. So a quick perusal of a beginner’s guide to options would probably be enough.
I took options in B-school, coded my own options pricing model, but do I actually understand them at a usuals level, not a chance.
But from a rudimentary level, there are funds that mechanically add and subtract equity exposure based on how the market has acted in the recent past, including volatility, and various Wall St houses track and publish estimates of how much these funds will have to buy or sell in the coming weeks depending on how the market acts in the coming days.. Currently, I think these funds are expected to buy something like $40BN of equity exposure in the coming week or so.
Another somewhat mechanical source of buying and selling is options dealers. If a trader buys a call [put] option, the dealer who sold the option has to hedge by buying [selling short] the underlying security. When that option expires, the dealer has to unwind the hedge by selling [buying to cover] the security. So from the option of options and their expiry date, one can anticipate dealer activity.
I think there are other mechanical flows and I may not have explained even these ones correctly.
Since my holding period is months or years rather than days and weeks, I don’t tend to pay too much attention to this sort of thing. To my detriment.
useful not usuals
Derek and John L, thx. 🙂