A survey has revealed that Wall Street fund managers’ risk appetite is at its highest level since 2010. According to a Bank of America (BofA) survey conducted from the 7th to the 13th, involving 163 fund managers overseeing a total of $401 billion in assets, their current cash allocation has dropped to 34%—the lowest since 2010.

Global stocks have emerged as the top asset choice among fund managers, with 34% of respondents naming them the most promising investment for the year. The MSCI ACWI (global stock index) has risen over 60% from its 2022 low, driven by the artificial intelligence (AI) boom and diminishing fears of a U.S. recession. However, 89% of respondents believe U.S. stocks are overvalued—the highest proportion since April 2001.

On the 18th, the Standard & Poor’s (S&P) 500 index rose 14.99 points (0.25%) from the previous session to close at 6,129.62, setting a new all-time high. Bloomberg reported that belief in “American exceptionalism” is wavering as investors turn their attention to European stocks.

Fund managers expect the Euro Stoxx 500 index to outperform the Nasdaq 100 in terms of returns this year. So far this year, the Euro Stoxx 50 has surged 12%, while the Nasdaq 100 has gained 5%. Overall investor sentiment—based on cash holdings, stock allocations, and global growth forecasts—rose from 6.1 to 6.4, though it remains below the “bubble” level recorded in December of last year.

Concerns about a global recession have fallen to their lowest level in three years, with 52% of respondents anticipating a soft landing, 36% predicting no recession, and 6% expecting a hard landing. In the event of a trade war, 58% of fund managers believe gold would yield the best returns, followed by 15% favoring the U.S. dollar and 9% choosing 30-year U.S. Treasury bonds.

Regarding Federal Reserve (Fed) interest rate cuts, 77% of respondents expect at least one rate cut this year, while only 1% anticipate a rate hike. However, after higher-than-expected inflation data, the bond market has scaled back expectations for rate cuts this year.

According to Bloomberg and other sources, following the release of January’s Consumer Price Index (CPI), swap investors tied to future benchmark rates are betting on a 0.25 percentage point rate cut this year.

The U.S. Department of Labor reported on the 13th that January’s CPI rose 3.0% year-over-year and 0.5% month-over-month. The 3% year-over-year increase marks the first time in seven months since June of last year (3.0%), while the month-over-month rise is the largest in 17 months since August 2023 (0.5%).

Roger Landucci, an analyst at Alphametrics Finance, remarked, “In this inflationary pressure, who could justify a rate cut?” Guy LeBas, chief fixed-income strategist at Janney Montgomery, added, “The CPI clearly indicates things are on the hot side, and the data isn’t cooperating with the Fed.”