S&P 500 rally near highs could weaken returns - The S&P 500 posted 14 new all-time highs in the past month, returning 10% year-to-date, with technology stocks accounting for 85% of the index's gain.
Goldman Sachs: US inflation expectations remain stable - Inflation expectations in the US remain anchored despite more than five years of above-target inflation, according to a research note from Goldman Sachs.
Institutional investors are increasingly concerned about the risks of rising inflation in the US, while fears of a slowing economic growth have significantly diminished.
According to Bank of America's Global Forex and Rate Market Sentiment Survey, released on May 15, 2026, the robust macroeconomic environment has brought the possibility of a further Federal Reserve interest rate hike back into the spotlight.
The monthly sentiment indicator, which surveyed 60 fund managers with assets totaling $869 billion, revealed a sharp shift in global risk positioning.
Bank of America analysts noted that "survey participants are increasingly nervous about the risks of rising inflation in the US, while concerns about a slowing economic growth have significantly diminished." The changing environment has overturned the previous consensus: 28% of fund managers believe US economic growth is fairly priced by the market, but inflation potential remains significantly undervalued—a figure double the 14% recorded last month.
Furthermore, a quarter of investors surveyed believe the Federal Reserve is the most likely major central bank to surprise the market with a larger rate hike than expected. Growing hawkish risks are directly changing the behavior of the bond market.
The report emphasizes that "growing risks of a Fed rate hike explain weakening confidence in the long-term rate strategy through the end of the year, as well as the decline in popularity of bets on a steeper US yield curve." In the foreign exchange market, resilience in economic data is recognized as the main short-term catalyst for the next round of US dollar appreciation.
Investor views on monetary policy in the eurozone also remain highly mixed. A majority—58% of fund managers—view a possible rate hike by the European Central Bank (ECB) as a practical "risk management step to ensure price stability."
However, 31% of respondents directly characterize further tightening by the ECB as a clear "regulatory error." Meanwhile, sentiment in emerging markets recovered from multi-year lows in May.
Fund managers have shifted to a neutral-overweight position in emerging market debt instruments, favoring local currency bonds. However, BofA strategists warned that the deterioration in global geopolitical sentiment raises "concerns about the fragility of the underlying conditions."
Finally, institutional capital is actively shifting from cash instruments to alternative investments. "Long risk" has become the most overweight trading strategy in the market, accounting for 47%, followed by "long commodities" at 22%.