More than twice as many of the survey participants self-identified as financial professionals versus retail investors. Three in five respondents were based in the U.S. or Canada. There was broad agreement between professionals and retail investors on the likely timing of a U.S. recession.
A bit more than half of the total respondents would heed the two-year versus the 10-year yield curve inversion as the most likely warning signal among yield-curve inversions. Only 12% of participants indicated the gap between three-month and 18-month notes — backed by Federal Reserve chair Jerome Powell — as a relevant barometer of recession risk.
Most investors expect the yield curve flattening to persist, with fully 79% saying the move will continue. U.S. bank shares are seen faring worse than the broader market in such an environment — however, there was a notable difference here between the professionals and retail investors, with professionals much more pessimistic on the outlook for bank stocks.
Another surprise is where investors saw value. Asked which country’s sovereign bonds are the most underpriced, a plurality of 60 said Russia. Respondents also liked bonds in the U.S., Germany, Japan and China. Brazil, Mexico and Turkey also received substantial support.
NOTE: The Markets Live survey ran between March 29 and April 1. For more markets analysis, see the MLIV blog.