Bank of America: The mood among fund managers is noticeably deteriorating

• 10 percent assume a hard landing
• 44 percent see geopolitics as the biggest risk
• Midterms as a possible catalyst

The end of the widespread euphoria

April 2026 marks a significant turning point in the sentiment of global portfolio managers, which has now reached its most pessimistic level in almost a year. The survey of 193 professionals managing $563 billion in assets, conducted by Bank of America, shows that professionals’ expectations are cooling faster than economic fundamentals are actually collapsing. Although concerns about stagflation – i.e. weak growth coupled with stubborn inflation – have increased massively, a deep recession remains unlikely for the majority of respondents, as Charu Chanana, Chief Investment Strategist at SAXO, comments on the survey. In fact, seven out of ten respondents still do not predict a recession, and less than ten percent of participants expect the economy to have a hard landing this year.

Geopolitics as a primary pacesetter

Geopolitical tensions have emerged as the dominant risk, with the market viewing oil prices in particular as a key conduit for inflation, yields and overall market sentiment. While many market participants hope for an end to current conflicts by April 2026, skepticism remains high about the full normalization of important trade routes such as the Strait of Hormuz. 44 percent of the fund managers surveyed named geopolitical tensions as the biggest “tail risk”.

This uncertainty is directly reflected in the commodity markets, where bets on rising oil prices are now among the most crowded positions. 24 percent of respondents described “long oil” and “long global semiconductors” as the most crowded trades. Interestingly, gold has lost its role as a primary hedge against geopolitical crises compared to previous months, as managers perceive oil to be much more closely linked to real economic inflation and growth dynamics, according to SAXO.

Defensive positioning without any signs of panic

Although risk appetite has noticeably weakened, the stable cash holdings of 4.3 percent show that there has not yet been a rush to extremely safe havens. The global equity allocation was drastically reduced compared to the previous month, but remains slightly overweight on average. The current uncertainty is particularly evident in Europe, where the positioning has massively collapsed from a significant overweight to a minimal level due to energy dependence, as MarketWatch points out. In contrast, emerging markets remain the most favored region, while the Japanese stock market suffered one of the sharpest swings in sentiment and is now underweight by investors.

Structural trends and political signals

Beyond the short-term volatility, there is ongoing skepticism among fund managers about the long-term strength of the US dollar. As MarketWatch writes, this is mainly due to concerns about the independence of the Federal Reserve and a generally loose monetary policy. At the same time, investors are increasingly turning their attention to the US midterm elections, with more than a third of those surveyed already expecting a clear victory for the Democrats in both chambers, as SAXO emphasizes. This political component complements the picture of a selective market phase in which quality, pricing power and the resilience of balance sheets are given greater weight than pure market profits. Ultimately, however, this more defensive environment also offers potential: Since expectations are already low, positive news regarding energy prices or corporate earnings could trigger a disproportionate market reaction.

Markus Maier, editorial team at finanzen.net

Selected leveraged products on Bank of America

With knock-outs, speculative investors can participate disproportionately in price movements. Simply select the leverage you want and we will show you suitable open-end products on Bank of America

The leverage must be between 2 and 20

Advertising