Recession fears increase among investors with 58% now expecting a downturn in the next 12 months, BofA says

• Bank of America's Global Fund Manager Survey found that 58% of investors expect a recession in the coming 12 months.
• That's up from 47% in the last monthly survey and marks the highest percentage since May 2020.

Recession fears continue to climb among investors, as Bank of America's Global Fund Manager survey for August found 58% expect a downturn in the coming 12 months.

That's up from 47% in the last monthly survey, and marks the highest rate since May 2020.

As concerns of a downturn abound, BofA found that 88% of investors anticipate inflation to cool over the next year. The last time expectations for decreasing inflation registered at this clip was during the global financial crisis, analysts said.

"Sentiment remains bearish, but no longer apocalyptically bearish as hopes rise that inflation & rates shocks end in coming quarters," BofA wrote Tuesday. But the firm's Bull & Bear Indicator remains at "max bearish."

Still, the biggest tail risk remains high inflation, investors told BofA. The subsequent risks in order include a global recession, hawkish central banks, and systemic credit events.

Expectations for stagflation within the next 12 months, too, stayed elevated from the last survey at a record 90% of investors. In sum, nearly half – 47% – of investors told BofA they were taking on lower-than-normal risk levels.

Meanwhile, investors reported the most crowded trade is long the US dollar, although allocation to cash declined to 5.7% from 6.1%.