• Global recession expectations have fallen to their lowest level since February 2022, according to Bank of America's October fund manager survey.
  • Investor optimism about economic growth saw its biggest monthly jump since 2020, with 33% now expecting a "no landing" scenario.
  • The dominant view remains a soft landing at 54%, while hard landing expectations have dwindled to just 8% of respondents.

Shifting Sentiment

Bank of America's latest monthly survey reveals a dramatic shift in investor psychology as fears of a global economic contraction continue to recede. The proportion of fund managers anticipating a recession has dropped to its lowest point in nearly two years, marking a stark reversal from the pervasive pessimism that dominated markets through much of 2023 and early 2024.

The survey, which polls approximately 300 global fund managers overseeing nearly $800 billion in assets, shows the most significant monthly improvement in growth optimism since the post-pandemic recovery phase in 2020. The data suggests institutional investors are increasingly confident that central banks can successfully navigate inflation back to target levels without triggering a severe downturn.

Landing Scenarios Evolve

The changing sentiment is most evident in the evolving expectations around potential economic landing scenarios. The "no landing" camp—those anticipating above-trend growth with persistent but manageable inflation—has nearly doubled to 33% from just 18% in the previous survey. This represents the most dramatic shift in positioning.

Meanwhile, the long-dominant soft landing narrative, while still the majority view at 54%, has declined from 67% as investors migrate toward more optimistic outcomes. Hard landing expectations have compressed to just 8%, down from 10% previously, indicating that few market participants now anticipate the kind of severe contraction that seemed increasingly likely just months ago.

Economic Backdrop

The improved sentiment comes against a backdrop of resilient economic data, particularly from the United States, where consumer spending has remained robust despite higher interest rates. Bank of America's own recent earnings performance—with Q2 2025 revenue reaching $26.5 billion and net income of $7.1 billion—underscores the banking sector's resilience amid the shifting economic landscape.

According to people familiar with the survey methodology, the changing allocations reflect genuine conviction rather than tentative positioning. Equity allocations have increased significantly, with money moving out of defensive sectors and into more cyclical exposures. Cash levels, while still above historical averages, have declined as fear of missing out on potential gains begins to outweigh recession concerns.

Cautious Optimism

Despite the overwhelmingly positive shift, some cautionary notes remain. Survey respondents still cite inflation as the biggest tail risk, followed by geopolitical concerns and potential credit events. The sustainability of corporate earnings in a higher-rate environment also remains a point of contention among portfolio managers.

Bank of America representatives declined to comment beyond the published survey results when reached Tuesday morning. The bank's research team noted that while sentiment has improved dramatically, positioning remains far from euphoric, suggesting there could be additional room for markets to climb if the economic data continues to surprise to the upside.

Correction: An earlier version of this article misstated the percentage change in soft landing expectations. The figure has been corrected.