Money managers are heading into the new year with loud confidence on economic growth, stocks and commodities, and the latest BofA survey shows just how far that optimism goes.
The poll puts investor sentiment at 7.4 on a scale that tops out at 10, the strongest reading in four and a half years. That jump reflects changes in cash levels, stock exposure and expectations for global growth, and the number speaks for itself.
Combined exposure to equities and commodities has climbed to the highest level since February 2022, right before Covid-era inflation smashed markets and pushed global interest rates up fast.
The survey also points to rare optimism. Michael Hartnett, a strategist at BofA, said this type of bullish mood has appeared only eight times this century.
He pointed to stretches like November 2010 through February 2011, during the recovery from the financial crisis, and the wave between November 2020 and July 2021, when the post-Covid rebound pushed risk appetite higher.
He said these periods usually align with sharp bursts of growth and big swings in asset prices.
Tracking shifts across major equity indexes
The global rally is already visible. The MSCI All-Country World Index has gained almost 20% in 2025, marking a third straight year of strong double-digit returns. Central banks across major economies have been cutting rates while growth stays solid, and that mix has pulled benchmarks close to record highs.
The survey shows 57% of respondents expect a soft landing for the economy, and only 3% expect a hard landing, the lowest share in two and a half years. Cash holdings dropped to 3.3% from 3.7% in the prior month.
Concerns remain around U.S. tech valuations, with many watching what they call an AI bubble. A net 14% of participants still think companies are spending too much on capital expenditure, down from the 20% peak last month.
Futures tied to the Dow Jones Industrial Average fell 164 points, or 0.34%, while S&P 500 futures slipped 0.56% and Nasdaq 100 futures dropped almost 0.83%. All three major U.S. indexes ended Monday in the red after losses in large AI-linked stocks.
Europe had a rough morning too. The Stoxx 600 traded 0.2% lower at mid-morning in London. Most sectors and major bourses dipped. The CAC 40 fell 0.10% to 8,116.64. The FTSE 100 moved 0.44% lower to 9,708.52.
Germany’s DAX slid 0.36% to 24,141.53, and Spain’s IBEX 35 lost 0.36% at 16,980.40. Italy’s FTSE MIB inched 0.08% higher to 44,150.17, giving Europe at least one green spot. The broader Stoxx Europe 600 dropped 0.19% to 581.44.
Tracking changes in global economic signals
Economic data from Europe came in soft Tuesday morning, with private-sector activity in the euro area getting slower than expected as German industry weakened.
According to data from LSEG, the Composite PMI from S&P Global slipped to 51.9 from 52.8, still above the 50 mark that separates growth from contraction, as analysts had expected a steady reading.
This comes as the European Central Bank is preparing to set rates for the last time this year. Traders do not expect major policy changes, given that inflation is still near the 2% target.
U.S. Treasury yields dipped as investors braced for fresh data. The 10-year yield eased to 4.178%, down less than a basis point. The 2-year held at 3.508%, while the 30-year ticked up to 4.853%. Shorter maturities showed mixed moves, with the 1-month at 3.696%, the 1-year at 3.555%, the 3-month at 3.655% and the 6-month at 3.62%. A basis point equals 0.01%, and yields move opposite of prices.
Traders are now waiting for November jobs data. Economists expect 50,000 new nonfarm payrolls, down from 119,000 in September. They see unemployment at 4.5%, slightly higher than September’s 4.4%.
October retail sales numbers will also hit Tuesday morning, adding more fuel for markets already moving on rate expectations under President Trump’s 2025 economic backdrop.
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