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Illustration: Aïda Amer/Axios

Investors were nervous about a recession before Wednesday's selloff, with a third of fund managers polled in the latest Bank of America Merrill Lynch survey saying a recession is likely to happen in the next 12 months.

Why it matters: It's the highest recession probability since October 2011. However, a large majority of surveyed fund managers, 64%, says a recession is unlikely.

What's happening: Trade war concerns (51%) were the top risk cited by fund managers surveyed, followed by "monetary policy impotence," which remained in the second spot at 15%. A China slowdown and a bond market bubble round out the top 4, each at 9%.

  • Investors are certainly trading as if a recession is coming. U.S. Treasuries (32%) remained at the most crowded trade identified by fund managers, ahead of U.S. tech (19%), growth stocks (15%) and investment grade corporate bonds (12%).
  • “Investors are the most bullish on rates since 2008 as trade war concerns send recession risk to an 8-year high,” said Michael Hartnett, chief investment strategist. “With global policy stimuli at a 2.5-year low, the onus is on the Fed, ECB and PBoC to restore animal spirits.”

Methodology: Bank of America Merrill Lynch's surveyors spoke with 224 fund managers, who are collectively in charge of $553 billion worth of assets from Aug. 2 to Aug. 8.

Go deeper

In photos: Protesters rally for George Floyd ahead of Derek Chauvin's trial

Chaz Neal, a Redwing community activist, outside the Minnesota Governor's residence during a protest in support of George Floyd in St.Paul, Minnesota, on March 6. Photo: Kerem Yucel/AFP via Getty Images

Dozens of protesters were rallying outside the Minnesota governor's mansion in St Paul Saturday, urging justice for George Floyd ahead of former Minneapolis police officer Derek Chauvin's trial over the 46-year-old's death.

The big picture: Chauvin faces charges for second-degree murder and manslaughter over Floyd's death last May, which ignited massive nationwide and global protests against racism and for police reform. His trial is due to start this Monday, with jury selection procedures.

Biden says $1,400 stimulus payments can start going out this month

Photo: Samuel Corum/Getty Images

President Biden said Saturday that the Senate passage of his $1.9 trillion COVID relief package means the $1,400 direct payments for most Americans can begin going out later this month.

Driving the news: The Senate voted 50-49 Saturday to approve the sweeping legislation. The House is expected to pass the Senate's version of the bill next week before it heads to Biden's desk for his signature.