The May Global Fund Manager Survey (FMS) from Bank of America highlights that recession fears see a significant decline. The positioning, however, indicates that the “pain trade” might still trend upwards following favorable developments regarding U.S.-China tariffs.

Survey Key Insights

• Recession Predictions have dropped dramatically to 1%, down from 42% in April.

• 59% of managers project slower global growth, a decrease from 82%.

• 61% expect a “soft landing” scenario as the most likely outcome.

• Average Cash Reserves have decreased to 4.5%, which is lower than the long-term average of 4.8%.

Despite favorable trends, a substantial 62% perceive a trade-war-induced recession as the primary risk. About 43% expect it to trigger a credit event. Notably, U.S. equities are still underweight, with allocations at their lowest since May 2023. Conversely, Eurozone allocations have reached a seven-year peak.

Evaluating Shifting Allocations

As fund managers pivot towards Europe instead of the U.S., discerning relative market valuations is vital. Investors can assess current sector P/E ratios across different regions on entreprenerdly.com, a resource that offers the latest data on U.S. and Eurozone benchmarks.