Bank of America: The probability of a hard landing for the economy has fallen to the lowest level since January this year, and stock allocations are rising

On August 11, Bank of America's monthly fund manager survey showed that investors are pouring back into the stock market, fueled by optimistic earnings and improving global economic sentiment, with holdings of large-cap US technology stocks once again becoming the most popular trade. The August survey covered 169 participants, representing $413 billion in assets under management.

The probability of a hard landing has fallen to its lowest level since January 2025, and equity allocations are rising, but not yet reaching extreme levels. A net 78% of respondents expect short-term interest rates to fall over the next 12 months. Twenty percent of respondents believe the trade war remains the biggest "tail risk," while 27% believe inflation is hindering the Fed from cutting interest rates.

Twenty percent of respondents believe Federal Reserve Governor Waller is the most likely candidate for the next Fed Chair, 19% believe White House National Economic Council Director Hassett, and 15% believe former Fed Governor Warsh.