AI-Driven Concentration Risk and Yen Intervention Puzzle

Global investors are facing a growing concentration risk as artificial intelligence spending increasingly links equities, investment-grade bonds, high-yield debt, and private-market financing to the same underlying AI investment cycle. According to Bank of America's latest Global Fund Manager Survey, cash allocations have fallen to 3.5%, the sixth-lowest level in the survey's 28-year history.

The survey also found that a 56% net overweight position to global equities indicates highly bullish positioning. Almost 60% of managers expect a 'no landing' scenario for the U.S. economy, while more than 70% do not see reductions in AI-related capital expenditure forecasts this year.

The recent U.S.-Japan intervention to support the yen has also come under scrutiny after the currency gave back much of its initial gains. Deutsche Bank FX strategist George Saravelos argued that the structure of the operation may have weakened its credibility, while limited follow-through and expectations around Bank of Japan interest-rate policy contributed to the yen's subsequent weakness.