Risk appetite among money managers is starting to fade as they contend with bond-market volatility and the possibility of a Democratic win in the midterm elections.

That's according to Bank of America's survey of global fund managers, conducted between Sept. 4 and 10. Cash levels are rising slightly, while stock allocations are retreating-though both still remain solidly bullish. The monthly survey examines investors' outlook on a range of issues. Here are the key takeaways:

-- The biggest tail risk for markets is now a disorderly rise in bond yields, survey results showed-replacing "AI bubble" from last month's survey. The results were taken even before the global bond selloff gathered steam this week, which has pushed the 10-year Treasury yield past 5%.

-- Money managers are the most underweight bonds since May 2022. When asked about the most likely catalyst to get them to shift to overweight the asset class, 27% said U.S. Treasury yields would need to rise to an attractive level-for example, a 6% yield on a 30-year Treasury bond. (The 30-year yield is trading around 5.37% today.) Some 19% of respondents said they would need to see a major top in stock markets.

-- Nearly half of respondents anticipate that the U.S. Treasury Department's bond buyback program will have no effect on yields. Another 29% expect it to produce the opposite of what is intended: higher yields.

-- The most likely outcome to this year's midterm elections? A split Democratic House and Republican Senate, according to the survey results. Investors' expectations for Democrats taking both chambers of Congress also increased, however, with 31% of managers expecting that outcome, up from 23% in August.

-- Should a Democratic sweep happen, nearly half of investors surveyed expect bond yields to rise and stocks to fall.