Global fund managers were more optimistic about the worldwide economy in the first week of September than they were in early August, according to Merrill Lynch's Survey of Fund Managers for September. The Federal Reserve's Aug. 8 announcement that it would hold the federal funds rate steady at 5.25% has calmed managers' fears of inflation, with only 3% of respondents saying they expect core inflation to be higher one year from now, compared with 24% in August. Also, managers' overall outlook improved because oil had dropped $10 per barrel since early August, the report said.
Investment managers are slightly more willing to take risks and use cash reserves, the survey report said. Average cash balances from Sept. 1-7, the period of the survey, were down to 4%, from 4.4% a month before.
Merrill Lynch surveyed 222 fund managers with assets totaling $678 billion.