Bank of America Survey: Global Investors Sell U.S. Stocks at Record Pace, "Long Gold" Becomes the Most Crowded Trade

On Tuesday local time, a survey report released by Bank of America showed that global investors have significantly reduced their holdings of US stocks at a record pace over the past two months, and this selling trend is likely to continue. They believe that the trade war, which could trigger a global economic recession, is currently the biggest risk facing the market.

In Bank of America's monthly survey of fund managers, the net reduction in US stock allocation by respondents was 36%, the highest level in nearly two years. Over the two-month period, the allocation to US stocks fell by 53 percentage points, the largest decline on record.

Most fund managers believe that the trade war initiated by Trump could trigger a global economic recession, which would be the biggest risk facing the market.

In fact, after Trump introduced a series of tariff measures, US stocks recently experienced severe volatility, and even US Treasuries, which usually act as a safe haven during crises, were unexpectedly sold off, a situation that is hard to ignore.

Trump's move is also one of the highest-risk, highest-stake gambles in modern political and economic history. If Trump's trade strategy triggers a painful downturn in the US economy, senior officials of the Trump administration will be held accountable.

Although Trump has currently agreed to suspend tariff measures on many countries, the US stock market remains nervous, and the yield on US Treasuries, which affects various borrowing costs, remains high. Moreover, the trade war may escalate further.

Therefore, many respondents said they are still deeply concerned about US assets and plan to continue reducing their allocation to the US stock market. This means the selling trend seems likely to continue, and market volatility has not completely subsided.

The US stock market rebounded on Monday, but the S&P 500 is still down about 8% year to date. Bank of America surveyed 164 investors managing $386 billion in assets.

42% of respondents expect the global economy to fall into a recession, the highest level since June 2023 and the fourth highest in the past 20 years.

Additionally, 73% of respondents said the theme of US "exceptionalism" has peaked, a view that has driven the rise of the US stock market over the past few months.

49% of respondents said "long gold" is currently the most crowded trading strategy, ending the 24-month streak of "long US tech giants."

61% of respondents expect the US dollar to depreciate over the next 12 months, the highest level since May 2006. Over the past few weeks, the US dollar has fallen sharply against most other currencies, with the euro, yen, and Swiss franc all appreciating significantly.