58% of investors expect a downturn over the next 12 months

  • Bank of America’s Global Fund Manager Survey found that 58% of investors expect a recession in the next 12 months.
  • This is up from 47% in the last monthly survey and represents the highest percentage since May 2020.
  • “Sentiment remains bearish, but more apocalyptically bearish as hopes grow for inflation and rate shocks to end in the coming quarters.”

Recession fears continue to grow among investors, as Bank of America’s Global Fund Manager survey for August found that 58% expected a downturn over the next 12 months.

That’s up from 47% in the last monthly survey, and it’s the highest rate since May 2020.

While fears of a slowdown abound, BofA found that 88% of investors anticipate lower inflation over the next year. The last time lower inflation expectations were recorded at this level was during the global financial crisis, analysts said.

“Sentiment remains bearish, but more apocalyptically bearish as hopes grow for inflation and rate shocks to end in the coming quarters,” BofA wrote on Tuesday. But the bullish and bearish indicator of the company remains at the “bearish max”.

Bank of America Global Fund Manager Survey

Bank of America Global Fund Manager Survey

BofA Global Search


Still, the biggest tail risk remains high inflation, investors told BofA. Subsequent risks include, in order, a global recession, hawkish central banks and systemic credit events.

Expectations of stagflation over the next 12 months also remained elevated from the last survey, with investors hitting a record high of 90%. In sum, almost half – 47% – of investors told BofA that they were taking lower than normal levels of risk.

Meanwhile, investors reported that the most crowded trade is long in the US dollar, although allocation to cash declined to 5.7% from 6.1%.

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