Fund managers still worry a second wave of inflation is the biggest market risk – BofA’s Global FMS

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A second wave of inflation is seen as the biggest tail risk, according to BofA’s Global Fund Manager Survey, released in September.

Twenty-six percent of Fund managers still find a second wave of inflation as the biggest risk this month, slightly reduced from August.

In addition, 24% of them find the Federal Reserve losing independence and a U.S. dollar debasement as the biggest tail risk, followed by 22% of fund managers finding a disorderly rise in bond yields as the biggest risk, and only 12% finding trade war triggering global recession as the biggest risk – down from the first spot with 29% in August.

In addition, the survey found that “Long Magnificent 7” (MAGS [https://seekingalpha.com/symbol/MAGS]) is still the most crowded trade, according to fund manager respondents, with 42% of them ranking it first for the second consecutive month.

Fund managers found “long gold” (GLD [https://seekingalpha.com/symbol/GLD]) as the second most crowded trade, with 25% of respondents ranking it second, followed by short U.S. dollar (DXY [https://seekingalpha.com/symbol/DXY]), 14%; long crypto (BTC-USD [https://seekingalpha.com/symbol/BTC-USD]) (ETH-USD [https://seekingalpha.com/symbol/ETH-USD]) (9%), and long 2-year U.S. Treasury (US2Y [https://seekingalpha.com/symbol/US2Y]) (5%), in September.

Lastly, 73% of the Fund Manager Survey investors said that AI is deflationary in September, while only 7% said it is inflationary.

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