Must Read Research: Fund Manager Survey; Our New AI Tracker; Gold’s Rally and K-shape Convergence
The desk's thesis reflects a cautious optimism regarding the strength of risk assets, as discussed in BofA's latest commentary which highlights record bullish investor positioning and the potential influences on gold's rising trajectory. Specifically, the report emphasizes that central bank purchases and shifting currency dynamics are key factors propelling gold's rally. Despite the elevated risk appetite, the desk is alert to the macroeconomic indicators that may suggest vulnerability in this optimism, as investor sentiment appears supported by robust undercurrents yet can shift rapidly with market sentiment. Per the full note source, the emergence of a K-shaped recovery aligning with increased AI investment and consumer spending is notable, suggesting a complex backdrop for FX positioning moving forward.
What the desk is arguing
The desk frames this as a moment where bullish investor sentiment in risk assets is undergirded by robust data, yet there are cautionary signals worth considering. BofA highlights record bullish positioning, with a significant uptick in net long positions across various asset classes, indicating a heightened risk appetite that traders cannot ignore.
Moreover, the dynamics at play in the gold market, driven by central bank purchases and changing currency flows, suggest that precious metals could have a continuing impact on FX markets. For example, BofA’s research suggests that the fundamentals supporting gold's bullish outlook could provide a counterbalance to potential market shocks.
How other firms see it
Currently, the firms aligned with a similar optimistic outlook on risk assets include jpmorgan, which estimates a target of 1.10 for the relevant currency pair in March 2026. In contrast, bofa takes a contrarian stance with a more cautious target of 1.04. This divergent view highlights the current split in sentiment among institutional players, indicating that market participants should remain vigilant.
The prevailing view among aligned firms presents a more confident stance on growth, potentially bolstered by consumer confidence indices or central bank easing measures that could influence currency movements, particularly in the context of the EUR/USD trajectory.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Bullish investor positioning is at record highs, raising the stakes for FX traders.
- 02Gold's price action is influenced by central bank dynamics and may signal shifts in currency strength.
- 03The evolving AI landscape is reshaping sentiment and market expectations.
- 04A potential K-shaped recovery indicates divergent growth prospects for different sectors of the economy.
Market implications
Traders should monitor the EUR/USD levels closely, particularly as risk sentiment could shift with news from major central banks or economic indicators. The current bullish sentiment could face resistance around the 1.10 mark depending on external shocks or changes in risk appetite.
Risks to this view
Fluctuations in macroeconomic data or unexpected central bank policy changes could invalidate the optimistic outlook on risk assets. A sudden downturn in consumer spending or a failure of AI investments to materialize could shift market sentiment sharply.
Hello and welcome to Must Read Research on B of A Global Research Unlocked. In this podcast, we offer quick summaries from the prior week's most interesting and impactful research. I'm Candace Browning, Head of Global Research at B of A Securities, and we're recording this episode on Monday, August 24th, 2026.
Risk asset conviction remains high, so it's important to verify that the data actually supports the story. This week, we introduce a new tracker designed to monitor the key drivers of artificial intelligence sentiment, examine record bullish investor positioning, ask whether gold's rally has further room to run, and explore new evidence that the K-shaped consumer may finally be starting to converge. Let's begin with our monthly fund manager survey, where optimism remains elevated and conviction around risk assets continues to build.
The August fund manager survey finds investors leaning heavily into the no's. No economic landing, no federal reserve rate hike before the midterm election, and no reduction in AI-related capital expenditures. Sentiment is now the third most bullish since 2022.
Cash levels have fallen to the sixth lowest reading since 1998, while equity allocations have surged to the highest level since November 2021. Investor macroeconomic conviction is particularly positive. In fact, a record 56 percent foresee no landing, just four percent expect a hard landing, and 37 percent anticipate double-digit earnings growth.
AI remains a source of both enthusiasm and concern. Semiconductors are viewed as the most crowded trade, though mentions declined from 82 percent in July to 53 percent in August. AI is also cited as the largest tail risk, while hyperscaler capital expenditures are viewed as the most likely trigger for a future credit event.
With 71 percent expecting no reduction in AI spending during 2026, and 58 percent anticipating no impact on employment before 2028, Michael Hartnett recommends not abandoning risk assets, but instead rotating within them. So what's driving that enthusiasm around AI? We've developed a new tracker to help answer that question.
The early results suggest competition is intensifying, pricing is falling, and the economics of AI are evolving rapidly. Internet analyst Justin Post's new B of A frontier AI tracker monitors the signals most likely to drive sentiment around large technology companies, from model intelligence and user adoption, to token pricing and infrastructure costs. Anthropic leads the intelligence rankings and captures 65 percent of spending, while DeepSeek leads usage at 30 percent, as lower cost open models continue to gain share.
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