Investor concerns that President Trump’s sweeping “Liberation Day” tariffs could tip the global economy into a recession have faded significantly, according to Bank of America’s latest Global Fund Manager Survey. The July poll found that a net 59% of managers now believe a recession is unlikely in the near term — a dramatic reversal from just three months ago, when a net 42% feared a downturn following the announcement of broad-based tariffs in April. 

Driving this shift is a more bullish outlook on corporate profits: 42% of respondents expect second-quarter earnings to beat Wall Street forecasts, marking the strongest profit optimism since February. That optimism has come alongside a period of muted volatility across equities, bonds, and currencies, suggesting there’s little urgency among managers to hedge aggressively or rotate portfolios. 

However, fund managers still view trade wars as the top macro risk for markets, with expectations that final U.S. tariff rates on major trading partners will remain elevated through year-end. Despite that, most investors believe the Federal Reserve will likely deliver one or two rate cuts before 2025 ends, helping to cushion any fallout and keep financial conditions accommodative. 

The survey — which covered 211 fund managers overseeing more than $500 billion in assets — also revealed speculation around the next Federal Reserve chair pick. About 26% of respondents see Treasury Secretary Scott Bessent as the most likely candidate, followed by former Fed Governor Kevin Walsh at 17%, current Governor Christopher Waller at 14%, and White House Economic Adviser Kevin Hassett at 7%. 

Taken together, the findings highlight that markets are still focused on earnings resilience and potential policy support, even as Trump’s aggressive trade strategy remains a wildcard for the global outlook.