Bank of America 
BAC says a trade war driven global recession is still the market’s top tail risk, but nerves eased a bit in August.
In the latest global fund manager survey, 29% picked a trade war recession as the biggest threat, down from 38% in July. Inflation is closing in at 27%, with managers warning sticky prices could keep the Federal Reserve from cutting rates, a setup that can crimp growth and risk appetite.
Other worries are still on the board. A disorderly jump in bond yields came in at 20%, an AI equity bubble at 14%, and debasement of the U.S. dollar at 6%. Put together, the mix shows geopolitics and macro are still steering positioning, even as the gap between the top two risks narrows and investors brace for policy to stay tighter for longer.
Sentiment on trade is improving, but inflation and yields keep the rate path uncertain, which matters for equities, credit and duration.trade remains the headline risk, yet inflation is catching up; the next data prints and next month’s survey will tell us if the shift sticks.