Investors sought safety in bonds at the greatest rate since the 2008 global financial crisis as simmering US-China trade tensions increase the chances of a recession, Bank of America Merrill Lynch's latest monthly survey showed.
Investors said US government bonds were the "most crowded" trade for the third straight month, while they saw the trade war as the top risk to markets.
High demand for bonds has sent yields to multi-year lows across the developed world with yields on German government bonds - Europe's traditional safety play - setting fresh record lows.
One-third of investors surveyed by BAML expect a global recession in the next 12 months, the highest such reading since 2011.
Last week, Goldman Sachs said that it no longer expected Washington and Beijing to come to a trade agreement before the 2020 presidential election and that the chances of a protracted trade war leading to recession were rising.
The tussle between the world's top economies has prompted central banks to take a dovish stance with the US Federal Reserve expected to come up with back-to-back rate cuts.
The "onus is on Fed/ECB/PBoC to restore animal spirits," Michael Hartnett, the bank's chief investment strategist, said.
In equities, the United States is seen as the most preferred region over the next 12 months, while they continue to shun Europe. Half of the investors surveyed said corporate companies are overleveraged.
Some 224 panelists with $553 billion in assets under management participated in the survey between August 2 and August 8.
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