BofA Survey Shows Record Expectations for ‘No Landing’ as Fed Chair Kevin Warsh Preps for Jackson Hole Debut

Bank of America's August global fund manager survey reveals that investor sentiment has reached the third most bullish level since 2022, with a record consensus conviction around a "no landing" economic scenario in which the economy continues to grow despite elevated interest rates. 

Cash levels have dropped to an extremely low 3.5%, while global equity allocations have surged to a net 56% overweight — the highest since November 2021 — signaling extraordinary risk appetite among institutional investors.

Setting the Table for Warsh’s Jackson Hole Debut

This unprecedented confidence in a no-landing outcome arrives as Fed Chair Kevin Warsh prepares for his debut speech at the Jackson Hole Economic Policy Symposium, scheduled for August 27-29. 

Warsh, who took office in May 2026, has deliberately reduced forward guidance compared to his predecessor Jerome Powell, telling markets to interpret macroeconomic data for themselves rather than relying on Fed signaling. 

This opaque communication style has created considerable uncertainty, making Jackson Hole an unusually high-stakes event for market participants seeking clarity on the policy outlook.

What the Survey Says About Rate Hikes

The survey also shows that 72% of fund managers believe no Fed rate hike will occur before the November midterm elections, while only 22% expect one. 

Money markets currently price in a rate hike by December, though the probability of a September increase has fallen sharply to roughly 34% following weaker-than-expected July employment data, which showed a loss of 23,000 jobs, and a modest cooling in consumer inflation to 3.4% year-over-year. 

These soft readings have substantially eased the immediate pressure on Warsh to tighten policy.

Pressure from the Bond Market

However, the bond market is sending a starkly different message from equity investors. The 30-year Treasury yield surged to 5.31% earlier this week, its highest since 2007, even as short-term rate hike expectations have diminished. 

This divergence reflects deep structural concerns, including massive U.S. fiscal deficits approaching $40 trillion in total debt; competition for capital from AI hyperscalers issuing unprecedented amounts of corporate debt; diminishing foreign demand for Treasuries; and Warsh's hands-off approach that markets interpret as tolerance for above-target inflation.

Where’s the Opportunity for Investors?

For investors, the no-landing consensus suggests that if Warsh delivers reassuring remarks at Jackson Hole — perhaps by clarifying his inflation-fighting framework without signaling imminent tightening — markets could rally further, and particularly rate-sensitive growth and AI infrastructure stocks. 

However, the risks are substantial and asymmetric. The Iran conflict remains unresolved, with the temporary ceasefire having expired. Brent crude has returned above $90 per barrel, and long-term bond yields are at levels that historically precede financial stress. 

Should Warsh fail to articulate a credible path back to 2% inflation, bond vigilantes could push long-term yields even higher, which would threaten equity valuations, mortgage affordability, and the AI-driven capital expenditure cycle that underpins current market optimism. 

The combination of record bullish positioning and genuine macro uncertainty means that any disappointment from Jackson Hole could trigger sharp reversals, suggesting investors should consider maintaining diversification across defensive sectors and shorter-duration bonds, even as the consensus trades point overwhelmingly toward continued risk-taking.

For more insights from our Barchart experts, discover how to hedge stocks using options with Rick Orford; explore safe-haven sectors with John Rowland, CMT; and learn how to build a bond ladder with Rob Isbitts.

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