More than a third of investors expect a recession in 12 months, Bank of America Merrill Lynch survey finds
- Findings represent the highest recession probability in eight years, bank says
- Investors rotating out of equities, make highest allocation to bonds since September 2011, survey finds
Recessions fears have reached their highest levels in eight years as investors shift away from equities to bonds, according to the latest Bank of America Merrill Lynch survey of fund managers.
More than a third of investors surveyed believe a global recession is likely in the next 12 months, the highest recession probability since October 2011, the August Fund Manager Survey found.
“Investors are the most bullish on rates since 2008 as trade war concerns send recession risk to an eight-year high,” Michael Hartnett, Bank of America Merrill Lynch chief investment strategist, said. “With global policy stimuli at a 2.5-year low, the onus is on the [US Federal Reserve], [European Central Bank] and [People’s Bank of China] to restore animal spirits.”
The survey was conducted between August 2 to 8 and interviewed 224 panellists with US$553 billion in assets under management.
The results came just days after Goldman Sachs lowered its 2019 US economic growth forecast by 0.2 percentage point to 1.8 per cent as recessions fears rise and UBS cut its gross domestic product growth forecast for China in 2019 and in 2020 as the US-China trade war wreaks a heavier toll than expected.
Bank of America Merrill Lynch’s US economists believe there is a one in three chance of a recession in the next 12 months.