Global investors remain set on Goldilocks soft landing despite bearish stance
One out of four investors expect that there will be no recession in the next 18 months, but the share of those expecting a recession in the first half of 2024 is rising.
A soft landing is the base case for 59% of investors surveyed, while hard landing expectations are on the rise, up by nine percentage points to 30% in October.
The optimistic outlook for the economy contrasts with an overall bearish sentiment, which is based on cash positions, equity allocation and growth expectations, with half of investors expecting a weaker economy over the next 12 months.
One out of four investors expect there will be no recession in the next 18 months, but the share of investors expecting a recession in the first half of 2024 is rising.
Bank of America forecasts no rate cuts for UK until 2025 due to 'entrenched inflation'
According to BofA, 44% of fund managers surveyed expect the global economy to fall into recession in the first or second quarter of next year, up from 36% in September.
The overall consensus is for lower short-term rates and lower inflation, with expectations for both hovering near the highs seen during the Global Financial Crisis. Over the next 12 months, 80% expect global CPI to be lower, while 73% expect a cut to short-term rates.
A vast majority (60%) of investors believe the Federal Reserve is done hiking rates, with more than half expecting the first rate cut by the Fed to take place in the second half of next year.
High inflation keeping central banks hawkish remains the biggest tail risk for investors (31%), followed by worsening geopolitics (23%), a global recession or hard landing (21%) and a systemic credit event (15%).
BofA: European recession fears decline among managers despite growth
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