Many individual investors have also expressed angst over the lack of agreement on the debt ceiling, and it is likely that this contributed to the decline in bond allocations.
Even with the improvement in sentiment, pessimism remains high and is above average for the longest period of time in approximately a year. (Bearish sentiment never dipped below 30% during the 18-week period of from May 13 to September 9, 2010.) The failure of Washington to reach an agreement on the debt ceiling and the slow pace of economic growth remain key concerns for individual investors.
This is a sign that individual investors remain cautious, which is not surprising given the ongoing lack of resolution to the debt ceiling unresolved and the slower pace of economic growth.