Many fund managers are expecting a recession to set in within twelve months, revealed a Bank of America Merrill Lynch survey.
According to the survey, that saw the participation of 224 panellists with $553-billion of assets under management, the number is the highest since 2011 pointing towards the rising anxiety towards the future of the global economy.
“34 percent of FMS investors think a recession is likely in the next 12 months vs. 64 percent who think it’s unlikely, the highest recession probability since October ’11; note this is in line with BofAML US economists, who think there is close to a 1 in 3 chance of a recession in the next 12 months,” the survey said.
It also revealed that the investors are most bullish on bonds since 2008 as trade war concerns have led to recession risk being at an eight-year high. 43 percent of the fund managers expect lower short-term rates and only 9 percent expect higher long-term rates over the next 12 months.
The revelations of the survey come at a time when US Federal Reserve has indicated that it will not be starting a prolonged easing cycle amid rising fears of recession and continuing escalation of a trade war between the US and China.
Over half the fund managers said the current tariff war between the US and China was the biggest tail risk to markets while 15 percent believed monetary policy impotence was the biggest tail risk.
When it comes to risk, 33 percent responded that the biggest central bank-induced bubble risk will be corporate bonds followed by US equities, Government bonds and gold.
First Published: IST