Bank of America: The market sentiment index has risen to the most extreme bullish level since 2021, and risk exposure should be appropriately reduced

Bank of America strategists indicate that investor bullish sentiment has reached extreme levels, suggesting a reduction in exposure to risk assets. The Bull-Bear Index rose from 9.4 to 9.7, marking the highest level since 2021. The rise in the stock market, inflows into high-yield bond funds, and narrowing credit spreads are the reasons for the optimistic sentiment.

Hartnett stated that we are still in the summer "withdrawal/rotation" phase, advising investors to reduce allocations to risk assets and shift towards defensive assets and the dollar.