Investors are the most bearish in 5 months as credit crunch hits growth

Investor pessimism surged to the highest level in five months in April as turmoil within thethreatens to ignite a credit crunch for U.S. consumers and businesses, according to Bank of America's global fund manager survey.

Fund managers indicated that worries over tighter credit conditions had driven up bond allocation to a net 10% overweight, the highest since March 2009. In total, nearly two-thirds of investors expect a weaker economy in the next 12 months, the highest since December and reversing four months of improvement. MORGAN STANLEY WARNS STOCK MARKET IS STILL 'FAR FROM OUT OF THE WOODS'

About 35% of participants in the survey identified the bank credit crunch and a global recession as the top risk to markets. That compares to about 34% who highlighted sticky inflation that keeps central banks on a hawkish trajectory as the biggest threat.Another 16% see a systemic credit event as the biggest risk, while just 11% are worried about geopolitics – such as the war in Ukraine or tensions between China and Taiwan – worsening.

The poll of 286 fund managers was conducted between April 6 and April 13, in the aftermath of the stunning implosion of Silicon Valley Bank and Signature Bank.

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