--- title: "State Street Markets: Despite the cooling market sentiment, investors still have confidence in risk assets" type: "News" locale: "en" url: "https://longbridge.com/en/news/289027116.md" description: "The State Street Market's May institutional investor indicators show that, despite a retreat in risk appetite from April's highs and a shift towards neutral market sentiment, investors still have confidence in risk assets. Equity allocation has reached a new high since 2000, mainly increasing holdings in U.S. stocks and the healthcare and technology sectors; fixed income remains flat. In terms of foreign exchange, institutions are underweighting the U.S. dollar, with euro funds shifting from inflow to outflow, and the performance of Asia-Pacific currencies is mixed" datetime: "2026-06-08T08:54:03.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/289027116.md) - [en](https://longbridge.com/en/news/289027116.md) - [zh-HK](https://longbridge.com/zh-HK/news/289027116.md) --- # State Street Markets: Despite the cooling market sentiment, investors still have confidence in risk assets According to the Zhitong Finance APP, State Street Market has released its institutional investor indicators. The State Street Institutional Investor Risk Appetite Index remained in positive territory in May, but has significantly retreated from its high in April. Market sentiment across almost all asset classes has cooled, with only the foreign exchange market remaining relatively stable. Nevertheless, extreme positioning levels remain high, indicating that despite the gradual shift towards a neutral market sentiment, investors still have confidence in the outlook for risk assets. Over the past month, equity allocation has slightly increased by 1 percentage point, primarily funded by cash outflows; while fixed income allocation, excluding Treasury bills, has remained largely unchanged. Overall, the structure of institutional investors' holdings is stable, with only limited reallocations among major asset classes. Noel Dixon, Senior Macro Strategist at State Street Market, stated that as of the end of May, the equity allocation ratio of asset management institutions reached a new high since 2000. The stock holdings increased by 1 percentage point, funded by cash; while fixed income asset allocation remained flat overall. Investors continued to increase their holdings in U.S. stocks, which remain the largest overweight asset. Within the U.S. market, allocations to healthcare, utilities, and information technology have increased; while allocations to communication services, energy, and real estate sectors have decreased. Noel Dixon pointed out that in the foreign exchange market, sentiment towards the U.S. dollar remained negative in May, with the bank's 20-day dollar fund flow indicator in the bottom quartile, indicating that institutional investors are still significantly underweight in the dollar. Despite several U.S. economic data unexpectedly strengthening, the interest rate market is still only pricing in one rate hike by the Federal Reserve this year, which is relatively moderate compared to other major central banks. Meanwhile, euro fund flows shifted from net inflows at the beginning of the month to net outflows in May. The escalating conflict in the Middle East has heightened concerns about the European economic outlook, thereby weakening demand for European assets. In the Asia-Pacific market, the South Korean won, offshore renminbi, and Philippine peso saw the strongest buying, while the Thai baht, Indonesian rupiah, and Malaysian ringgit experienced slight net outflows. Noel Dixon noted that in May, the overall weighted fund inflow into U.S. sovereign bonds significantly increased, indicating that institutional investors have returned to net buying. In contrast, German government bonds remained in a state of net outflow throughout the month. Emerging market sovereign bonds also continued to see net outflows in May. By region, Asia-Pacific bonds continued to face net selling, while Latin American bonds welcomed net inflows ### Related Stocks - [STT.US](https://longbridge.com/en/quote/STT.US.md) - [SPIN.US](https://longbridge.com/en/quote/SPIN.US.md) ## Related News & Research - [Tax concessions, FCNR sweeteners may impact forex marginally: Joseph Thomas](https://longbridge.com/en/news/288833330.md) - [Singapore central bank executive to chair global forex body](https://longbridge.com/en/news/288903053.md) - [The Bond Market Holds The Key](https://longbridge.com/en/news/288754324.md) - [Foreign holdings of Indonesian bonds hit close to two-decade low as confidence crumbles](https://longbridge.com/en/news/288687153.md) - [Candriam favors 10-year German bunds, more cautious on some other eurozone bonds](https://longbridge.com/en/news/288266698.md)