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Big investors are more bearish about the prospects for the dollar than at any time in nearly two decades, according to data that underlines the hit to US assets from Donald Trump’s trade war.
A net 61 per cent of respondents to Bank of America’s Global Fund Manager Survey expect the dollar to depreciate over the next 12 months, the most since May 2006.
The dollar has tumbled 9 per cent this year against a basket of major currencies, a fall that accelerated since Donald Trump announced “reciprocal” tariffs at the start of the month.
The report also showed a record number of global investors are intending to cut their exposure to US equities, at a net 53 per cent of respondents.
The change in attitudes since the start of the year was made clear as bullish bets on the “Magnificent Seven” big US tech stocks were knocked off their top spot as the most crowded trade for the first time in more than two years, replaced by gold, traditionally a haven in times of uncertainty.
More than $5tn was erased from the value of the blue-chip S&P 500 in the three days after the US president announced sweeping “liberation day” tariffs on major US trading partners on April 2, triggering fears of a global economic recession.
But the market rebounded last week when Trump paused most of the reciprocal duties, even as China was excluded from the reprieve. Stocks climbed on Monday after the White House over the weekend temporarily excluded smartphones and other consumer electronics from its steep “reciprocal” tariffs, including those imposed on China.
The report showed a sharp decline in risk appetite among fund managers. Tolerance for risk reached its lowest point for two years and investors suggested they are opting for safer assets including bonds, cash and defensive stocks such as healthcare and utilities, at the expense of riskier equities that would be exposed to an economic downturn.
The erratic announcements from the US administration have rocked investors’ faith in the world’s biggest economy and sparked an exodus of cash from the US stock market, which has long outperformed its European and Asian peers.
Investors are suffering a “crisis of confidence” in the US, said the global head of cash equity trading at a large European bank.
“The problem is that three minutes from now we could get a headline [out of the White House] which may leave us relatively better or worse than where we are right now. [Investors] don’t want to look like idiots.”
Expectations for the global economy also fell to a record low. A net 82 per cent of the respondents expect weaker global growth over the next 12 months, marking a collapse in sentiment compared with just two months ago when respondents were equally divided over the direction of the economy.
The greatest proportion of respondents since before the global financial crisis said the outlook for US profits was “unfavourable”.
Investors were unusually united in their view of where risks lie, with 80 per cent of the respondents citing a trade war-induced recession as the biggest risk.
The BofA survey was carried out between April 4 and April 10 2025, covering 164 participants with $386bn in assets under management.
https://www.ft.com/content/67d49ead-211a-4860-ab62-83b59f70db04
