Fears of a bond-market crash, a breakdown in globalization, a new crisis in the euro area?

There were a bevy of reasons for fund managers to push their cash balances to 5.8 percent of their portfolios in October, up from 5.5 percent last month, matching levels not seen since the aftermath of the Brexit vote. The share of cash hasn't been higher than that since November 2001, shortly after the terrorist attacks in the U.S.

The amount of dry powder in portfolios is above that seen during both Europe's sovereign-debt crisis and the U.S. debt-ceiling debacle, according to Bank of America Merrill Lynch's monthly survey of money managers. 

“This month’s cash levels indicate that investors are bearish, with fears of an EU breakup, a bond crash and Republicans winning the White House jangling nerves,” said Michael Hartnett, the bank's chief investment strategist.

There are no shortage of risks on the investor horizon, according to market participants surveyed, with 18 percent fearful of a disorderly adjustment in the bond market.

The monthly survey solicits the views of investors with more than half a trillion dollars in cumulative assets under management.

Over the past year and a half, Hartnett has advised investors to hold more cash in their portfolios or be outright long paper money on multiple occasions.

In mid-September, a Goldman Sachs Group Inc. team led by Managing Director Christian Mueller-Glissman downgraded bonds on a three-month basis while also retaining an overweight position on cash.

David Fuller's view

These cash reserves are higher than many of us expected and this news may have contributed to today’s firm performance by stock markets.

Almost all stock markets were higher today. There were a number of moderately sized upward dynamics, including for India, China led by HK China Enterprises (H-Shares), Italy and Sweden.  While I would not read too much into this, it has checked the recent slide in many market for at least the near term.  Closes beneath today’s lows would be required to question scope some additional recovery in what remains an uncertain and somewhat choppy market environment.