Overview
- Investor sentiment in December rose to its highest since mid-2021, with BofA’s composite reading at 7.4 on a 10-point scale.
- Cash holdings fell to a record low of 3.3% as combined allocations to equities and commodities reached the highest since February 2022.
- BofA’s Bull & Bear Indicator climbed to 7.9, just shy of the firm’s 8.0 sell threshold, after earlier 2025 sell signals preceded bouts of volatility rather than prolonged declines.
- An AI-related bubble or debt stress from heavy AI infrastructure spending ranked as the top market tail risk, with concentrated bets in the largest tech stocks still prominent.
- A majority expect a soft landing over the next year with only a small share forecasting a hard landing, and reports differed on sample size, citing either 203 managers with $569 billion AUM or 238 respondents.