• 70% of fund managers expect stagflation—high inflation with weak growth—over the next year, unchanged from July.
  • Only small minorities anticipate stagnation (12%), boom (7%), or a "goldilocks" soft landing (7%).
  • Defensive positioning remains dominant as macro sentiment stays cautious on risk assets.

Stagflation Concerns Remain Entrenched

Bank of America’s August Global Fund Manager Survey reveals that stagflation fears continue to dominate investor sentiment, with 70% of respondents bracing for a year of elevated inflation and sluggish growth. The reading mirrors July’s results, underscoring persistent unease about the macroeconomic outlook. Just 7% foresee a "goldilocks" scenario of stable growth and cooling inflation, while 12% predict outright stagnation.

The survey, which polls roughly 400 institutional, mutual, and hedge fund managers worldwide, has been a reliable barometer of market sentiment for decades. Earlier this year, it registered one of its most bearish readings in 25 years amid collapsing growth expectations and elevated cash holdings. The latest data suggests little has changed, with managers maintaining defensive allocations and favoring resilient earnings profiles over cyclical bets.

Defensive Posturing and Market Implications

With stagflation risks looming, investors have gravitated toward quality assets, cash, and commodities while shying away from long-duration growth exposures. BofA’s research team notes that this aligns with historical patterns during periods of inflation persistence and growth uncertainty. Trade tensions and central bank policy dilemmas have further reinforced caution, particularly in equity markets where dispersion across regions and sectors remains pronounced.

"The survey reflects a market still hedging macro downside," said one strategist familiar with the findings. "Until there’s clarity on inflation trajectories or policy pivots, this defensive skew is likely to persist." Attempts to reach BofA’s Global Research team for additional commentary were unsuccessful ahead of the report’s full public release.

Looking Ahead

Near-term shifts in stagflation expectations may hinge on upcoming inflation prints and growth indicators, such as PMIs and retail sales data. BofA’s analysts are tracking regional divergences, noting that emerging markets could see earlier rate cuts—a potential catalyst for easing global stagflation narratives. For now, however, the survey underscores a risk-averse mindset that shows no signs of abating.