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Global recession looms, according to Investor consensus

A larger majority of investors now believe the global economy is likely to tip into recession within 12 months, according to the latest Bank of America global fund managers’ survey.

Surveyed investors said the biggest tail risk was inflation staying high.

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Over 58% of respondents believe recession is likely, up from a net 47% a month earlier.

The net figure, which represents positive answers less negative ones, is the highest reading since May 2020.

Still, investors were overall a little less pessimistic this month than in July, the poll found. “Sentiment remains bearish, but no longer depresively bearish, as hopes rise that inflation and rates shocks end in coming quarters,” said Michael Hartnett, chief investment strategist.

A few other highlights from the widely eyed monthly survey:

  • Growth expectations and allocation to equities rose
  • 88% of investors expect lower inflation in the next 12 months
  • The most crowded trade is long the U.S. dollar, but allocation to cash declined from 6.1% to 5.7%
  • The biggest tail risk is that inflation stays high, investors say
source: WSJ/Bank of America
Image: Recession