The latest fund manager survey by BofA has found that a net 92% of survey participants expect a recession in Europe over the next twelve months up from 75% last month, with 68% of investors believing that the energy shock and tightening credit conditions will lead to a further sharp loss in growth momentum. Also 66% of respondents expect US growth to remain weak or slow further, while 76% are convinced that China growth is unlikely to improve amid Covid challenges and the debt crisis in the property sector. A majority of respondents expects the macro cycle to trough in H1 next year.
Ther report found that as rates rise to crush inflation, 66% of investors think demand destruction will be the main macro theme over the coming months up from 54% last month, while 11% think supply constraints will dominate down from 19%.
A net 79% expect inflation to decline over the coming twelve months, close to a 15-year high, with only a net 11% expecting 10-year bond yields to rise over the coming year, a three-year low. That said, a plurality of 36% of respondents still see high inflation as posing the biggest risk for markets, making it the most prominent risk factor, followed by hawkish central banks for 20%.
