BofA Survey Shows Pessimism Eases, but “Pain Trade” Remains

Bank of America’s May Global Fund Manager Survey (FMS) reveals that while recession fears have abated sharply, positioning remains skewed enough that the “pain trade” is still modestly higher after positive U.S.–China tariff news.

Key Survey Takeaways

• Recession odds plunged to 1% (from 42% in April).

• 59% of managers now expect weaker global growth (down from 82%).

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

• Average cash balances fell to 4.5% (below the long-term 4.8% average).

Despite these improvements, 62% still view a trade-war-induced recession as the top tail risk, and 43% see it as the most probable trigger for a credit event. Meanwhile, U.S. equities remain significantly underweight, with allocations at their lowest since May 2023, even as Eurozone exposure hits a seven-year high.

Valuation Context for Shifting Allocations

With fund managers rotating toward Europe and away from the U.S., understanding relative market valuations is critical. Investors can compare current sector price-to-earnings multiples across regions using the Sector P/E Ratio API, which provides up-to-date P/E data for U.S. and Eurozone benchmarks.