Fund managers are the most bullish in two years.

That was one, among many, takeaways from the February edition of BofA’s closely-watched Global Fund Manager survey, released on Tuesday.

This month’s installment marked the first time since liftoff that investors don’t expect a recession. As the figure on the left below shows, the net share saying a downturn is likely in the next 12 months is negative. Given that, it’s not surprising that panelists’ views on global growth are likewise the most optimistic since early 2022.

“Optimistic” is still a relative term when it comes to the global economy, but at -25%, the net share expecting stronger growth was the highest since February of 2022 and much improved from January’s -40%. That series maps reasonably well with YoY US equity returns.

The demonstrable improvement in fund manager disposition comes as the US economy continues to outperform. The Atlanta Fed’s GDPNow tracker is currently at 3.4% for Q1.

As for the rest of the world, things could be going better, frankly. Germany’s woes are deepening and China’s flirting with outright deflation. But on most days, the good vibes across the world’s largest economy drown out the more foreboding rumblings emanating from other locales.

Higher inflation landed at the top of the tail risk list this month. “Hard landing” is now a distant third (figure on the right, below). Note that hard landing easily took the top spot as recently as December, when the share of survey panelists who identified it as the top risk was 33%. That share in February was less than half that, at just 15%.

The figure on the left above shows just 11% of investors have hard landing as their base case. Nearly one in five now say “no landing” is the most likely outcome.

There’s no mystery as to what’s behind generalized investor cheer. “Lower interest rates [are] the catalyst for optimism,” BofA’s Michael Hartnett said Tuesday, noting that a mere 4% expect higher short rates going forward.

Suffice to say no one’s anticipating the resumption of rate hikes. And only 7% expect higher inflation.

So, if you’re wondering what could blindside consensus, now you know. As Nomura’s Charlie McElligott put it last week, “the pain trade shocker would be that currently ultra-low delta tail where ‘animal spirits 2.0’ would see a surprise resumption of actual reflation, when nearly the entire investment community has left that one for dead.”

More than 200 participants with nearly $570 billion in AUM between them responded to this month’s BofA poll.