According to a monthly fund manager survey by BofA, investors are more concerned about the outlook for global growth than at any time since the 2008 global financial crisis.
The majority of investors managing around $1 trillion in assets polled between March 4 and 10 now expect an equity bear market in 2022, and allocations to global equity have dropped to their lowest levels since May 2020. Cash levels among investors rose to nearly 6%, while allocations to commodities rose to a record 33%. The U.S. investment bank said in the note that long oil commodities are the top crowded trade.
The number of rate hikes from the U.S. Federal Reserve in 2022 has gone up, as investors have been expecting to see a decrease in liquidity since the coronaviruses hit financial markets in March and April 2020.
BofA said that central banks have historically been much less inclined to hike when liquidity conditions are very poor.