A chill has run down investors’ backs over the past month, according to Bank of America Merrill Lynch’s June global fund managers survey.

“FMS investors have not been this bearish since the global financial crisis, with pessimism driven by trade war and recession concerns,” Merrill’s chief investment strategist Michael Hartnett said in a statement.

“The tactical ‘pain trade’ is higher yields and higher stocks, particularly if the Fed cuts rates on Wednesday.”

The survey was conducted June 7 to 13 among 230 panelists with $645 billion in assets under management.

Investor concerns about a trade war increased by 19 percentage points from the May survey, with 56% of respondents naming it the top tail risk to the market. A potential trade war has topped the list for 14 of the last 16 months.

Other risks paled by comparison: monetary policy impotence, cited by 11% of fund managers; U.S. politics, 9%; and a slowdown in China, 9%.

Allocation to global equities fell by 32 points in the June survey to net 21% underweight, the lowest allocation to equities since March 2009 and second biggest drop in the survey’s 23-year history, Merrill said.

Emerging market equities remained the consensus regional allocation, despite falling 13 points to 21% overweight, followed by U.S. equities, which edged up three points to 5% overweight.

Investors’ average cash balance soared to 5.6% from 4.6% in the May survey, the biggest jump in cash since the 2011 debt ceiling crisis. The fund manager cash rule has now been in “buy” territory for the past 16 months, according to Merrill.

This rule holds that when average cash balance rises above 4.5%, a contrarian buy signal is generated for equities. When the cash balance falls below 3.5%, a contrarian sell signal is generated.

Bond allocations shot up 12 points to net 22% underweight, the highest level since September 2011, as dovish central banks, falling inflation expectations and a risk-off sentiment drove interest rates lower.

The June survey found that investors had rotated from cyclical plays — equities, banks, Europe and tech — into defensive ones — staples, utilities, bonds and cash.

A record net 60% of investors surveyed said the U.S. dollar was overvalued, a 16-point increase from last month.

Collapse, Plummet

Global fund managers’ growth expectations collapsed in the June poll, dropping by a record 46 points from last month, with net 50% investors expecting global growth to weaken over the next year.

A record high 87% of survey participants said the global economy was in the late cycle.

Investors’ interest rate expectations have also collapsed. Merrill reported that in just eight months, the percentage of investors expecting higher short-term yields had flipped from net 89% to -10%, the lowest level since 2008. As recently as November, 63% of fund managers expected higher long-term yields.

Fund managers’ expectations for global profits plummeted by 40 points to net 41% of investors surveyed saying they expected earnings per share to deteriorate in the next year, the second biggest one-month drop in optimism on record.

Only one in 10 fund managers said they expected higher global inflation in the next year, down 30 points month over month and the most bearish inflation outlook since August 2012.

In the June survey, long U.S. Treasuries was the most crowded trade — for the first time, Merrill noted — cited by 27% of investors. It replaced long U.S. tech at the top of the heap, cited by 26%. Eighteen percent of investors said long U.S. dollar was the most crowded trade, and 9% said short European equities.