Investors are still stressing over inflation and about half say that it hasn't peaked yet, State Street survey says

• Nearly half of investors surveyed by State Street say inflation hasn't peaked yet.
• Investors also say that rising prices are a source of stress and anxiety.

Nearly half of investors say they're stressed out over inflation and that it has still not peaked, according to a survey by State Street Global Advisors, signaling low morale as markets digest signals that the US may be headed into a recession.

About 47% of investors told the research firm that inflation was causing them stress or anxiety, State Street reported. And, 49% of investors said they didn't believe inflation had peaked yet, showing some pessimism ahead of July's Consumer Price Index reading due out on Wednesday.

In June, the CPI clocked in at a hefty 9.1%. That is the fastest annual rise in inflation in 41 years.

Anxiety over rising prices shows that investors are still hesitant to trust the Fed, which is struggling to tame inflation after insisting that rising prices would be transitory.

The Fed's hawkish pivot in response to stickier inflation culminated in 75 basis point rate hikes at the most recent meetings in June and July. Although Fed Chair Jerome Powell said he believed the current policy rate had reached a neutral state, that hasn't done much to soothe investors, 57% of whom are worried about market volatility and 59% are worried their current investments will lose them money, State Street said.

The survey by the asset manager comes as many market observers and participants doubt the Fed's ability to pull of a soft landing for the economy. Among respondents, 58% of investors said they believe the US will topple into a recession within the next six to 12 months. Their responses echo forecasts from Bank of America, Wells Fargo, Morgan Stanley, and other investment banks who are predicting at least a mild recession on the horizon.