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AFP/Getty Images China’s Vice Premier Liu He (second right) next to U.S. Treasury Secretary Steven Mnuchin (second left)
Fund managers in January were the most optimistic on global growth in nearly two years as they kept their cash positions at the lowest level since 2013.
The monthly Bank of America fund manager survey found global growth expectations shot up 7 percentage points to 36% expecting global growth to improve.
On Monday, the International Monetary Fund published an economic forecast that expects global GDP to accelerate in 2020, though its view was slightly weaker than the one published in October.
The big change for the global outlook is the agreement between the U.S. and China on a so-called phase one deal on trade. Economists also expect the lagged impact of interest-rate cuts from the U.S. Federal Reserve and the European Central Bank to help growth this year.
Inflation expectations surged 14 percentage points to 56% of survey participants expecting higher global CPI in the next 12 months, which is the highest level since Nov. 2018. Global corporate profit expectations also jumped 14 percentage points.
That said, fund managers kept a similar allocation toward assets.
“Investors are bullish but not euphoric,” said Michael Hartnett, chief investment strategist, in a statement.
Cash levels stayed at 4.2% for the third consecutive month, which is the lowest since March 2013. The allocation to global equities rose 1 percentage point to a net 32% overweight, the highest in 17 months. The allocation to commodities rose 4 percentage points to a net 10% overweight, which is the highest level since March 2012.
A net 53% say the U.S. dollar DXY, -0.13% is overvalued, the second-highest percentage since 2002.
Bank of America surveyed 249 panelists with $739 billion in assets under management.
The S&P 500 SPX, +0.39% has set six records in the new year and is up 26% from its 2019 low. Stock futures ES00, -0.31% fell on Tuesday on worries over a spreading virus in China.
