Hello I’m Noel Dixon, Senior Macro Strategist at State Street. welcome to November’s update of our institutional Investors indicator the Three Eyes, where we explore how asset managers are positioned for the ever shaping and changing market environment of this point of 2025.

This month, investors maintained a neutral stance and showed little inclination to significantly adjust their portfolio allocations. The ongoing release of delayed data, resulting from the US government shutdown, has contributed to this cautious approach. Thus far, investors have largely refrained from making decisions, preferring to await greater clarity before taking action.

To illustrate this lets observe components of our Behavioral Risk Scorecard where we look across our 22 factors or flags for risk appetite in November. Recall last month only 12 factors were consistent with risk seeking activity where 10 were showing risk reducing activity. Fast forward to this month and we see the reverse. 10 factors are now showing risk seeking activity while 12 are showing risk reduction. Although this is a 4 point swing from positive to negative. We would characterize the -2 net reading as roughly neutral.

For additional insight, we observe our Risk Appetite Index which shows a slight decline in November of 9bps after being flat in November. This comes after 5 consecutive months of robust positive risk appetite from May through September. Again, highlighting a sudden shift in investor sentiment.
So what exactly happened underneath the surface. The answer is not much on a month-over-month basis. Equity allocation dipped very slightly by 1bps. Inflows into cash and fixed income increased three tenths and six tenths of a basis point respectively.

Within equities investors continue to be concentrated in the US. However, investors have continued to diversify into Europe and China. From a fixed income standpoint, flows were more dispersed across regions. That said, appetite for fixed income has been relatively subdued.

Apart from the assets mentioned, currency positioning also warrants attention. Among the G10 currencies, the US dollar remains the largest underweight position for real money investors. As market participants continue to await further economic data, the prevailing view is that labour market conditions are softening. This sentiment has led investors to anticipate that the Federal Reserve will lower rates by 25 basis points in December and follow through with current rate market expectations.

Altogether, it appears investors will need to get more data in the coming weeks to months to form a high conviction view.

In the meantime keep an eye out on COTW update on linkedin and our street signals podcasts on itunes, spotify, or wherever you get you get your podcast. Thanks for watching, good luck, and happy investing.