According to a new Bank of America survey, recession fears have jumped to all-time highs. A Bank of America Merrill Lynch (BAML) survey of United States credit investors found that the perceived probability of a recession in the next year spiked to 25%, its highest reading.
BAML’s survey found that recession risk is now the third-biggest concern for credit investors over geopolitical risk, just behind trade and China. It exceeded the record reached in July 2016 and marked an increase of 5 percentage points from last month’s survey.
According to a report by Business Insider, the top risks weighing on investors surveyed remained the trade war and China. Around 76% of investors said they expect a trade deal but not anytime soon, while 14% said they expect trade-war escalation. The fear of asset bubbles and a currency war also ticked up slightly in the latest survey.
Source: Business Insider
Investors across the board have grown increasingly worried that a recession is on the horizon. A survey last month found that more than 70% of economists think a recession will hit the US by the end of 2021, the Federal Reserve has signaled further rate cuts, and the inverted yield curve has flashed multiple warning signs about the state of the economy. –Business Insider
As far as the credit markets are concerned, investors are generally seeking higher-rated debt in the investment-grade and high-yield markets, BAML found. This means shunning the BBB-rated part of the debt market, which sits one step above junk status. Experts have been increasingly sounding the alarm on the group as it swells in size.
“In fairly dramatic fashion, high-grade investor sentiment on BBBs has soured to the point where only 33% expect outperformance on a risk-adjusted basis, down from 58% in July,” the team wrote.
Corporate debt is a big concern, as so many businesses struggle with being overleveraged.
In addition, high-yield cash levels are “off the charts,” the strategists wrote. More than half of high-yield investors reported having above-normal cash levels, up from 35% in July and marking the highest reading since April 2011.
It Took 22 Years to Get to This Point
Speaking to author and podcaster Dana Parish, former Centers for Disease Control and Prevention...
The United States just made a decision that could lead to World War 3. The current ruling class...
Russia has just announced that conscription in the former Soviet Union is "unnecessary" as...
This article was originally published by Michael Snyder at The Economic Collapse Blog. This...
Commenting Policy:
Some comments on this web site are automatically moderated through our Spam protection systems. Please be patient if your comment isn’t immediately available. We’re not trying to censor you, the system just wants to make sure you’re not a robot posting random spam.
This website thrives because of its community. While we support lively debates and understand that people get excited, frustrated or angry at times, we ask that the conversation remain civil. Racism, to include any religious affiliation, will not be tolerated on this site, including the disparagement of people in the comments section.
Wonderful news! Time to bet heavily. Go all in. ‘Cause remember boys and girls – “everybody is always wrong”.