These are professional investors’ 3 biggest fears for markets in 2024, according to a JPMorgan survey

After three hot inflation reports and signs of resilient consumer spending to start the year, Wall Street’s consensus economic outlook is shifting. Instead of predicting an outright recession—or a “soft landing” where both inflation and the economy cool—an increasing number of forecasters now expect a “no landing” scenario with slightly higher inflation and economic growth.

That’s changed professional investors’ view of the future. They now believe the biggest threats to markets this year are inflation, geopolitical turmoil, and higher interest rates—not an economic slowdown, according to a JPMorgan Chase survey conducted between March 26 and April 17.

Nearly a third of investors polled by JPMorgan said that “resurgent inflation” was the biggest threat to markets in 2024, while 21% gave the nod to geopolitical turmoil, and 18% pointed to higher interest rates or the Federal Reserve holding rates steady. And with the “no landing” narrative gaining steam on Wall Street, only 7% of professional investors said they expect a U.S. recession this year.

Despite their inflation concerns, professional investors were more bullish than usual with recession fears in the rearview for now. Just 16% said they expect the S&P 500 to fall from current levels by year-end 2024, and 36% said they’re forecasting a jump of 10% jump—or more—by the new year. But JPMorgan warned that the bullish outlook, and investors' bullish positioning in risk assets, is cause for concern.

“We highlight the risk that markets are not prepared for a deeper correction,” a team led by Joyce Chang, chair of global research at JPMorgan Chase, wrote.

Chang and her team, like many of the investors they surveyed, fear that the Fed will struggle with the so-called “last mile” in the battle against inflation. With oil prices rising more than 15% this year due to geopolitical tensions in the Middle East, and the U.S. economy proving its resilience to higher interest rates, many leading economists and professional investors now argue that inflation could get stuck in a range around 3% this year. That could keep interest rates higher, and weigh on both the economy and stocks.

“We are concerned that further market gains could be limited as the last mile for bringing inflation to target is not symmetric and the scope for the Fed to ease is being called into question given the resilience of U.S. growth,” Chang and her team wrote, noting that “the majority of investors acknowledge that it is too early to declare victory on inflation.”

JPMorgan’s survey results are backed up by a recent Deutsche Bank poll of professional investors that showed a higher-inflation, higher-growth “no landing” scenario was now the most common outlook for the economy, as well as Bank of America’s latest Fund Manager Survey, conducted between April 5 and 11.

BofA’s team found that investors were the most bullish since January 2022 in their poll, with only 7% saying they expect a U.S. recession this year. The top risks for markets in BofA’s survey have also shifted in recent months from recession in December to inflation and geopolitics today, just like JPMorgan’s. When asked what the top “tail risk” to markets is this year, 41% of fund managers surveyed by Bank of America said inflation, while 24% said geopolitics (higher interest rates were not listed as an option on the BofA poll).

But while many professional investors fear resurgent inflation, they aren’t forecasting a return to COVID-era highs. Over 85% of investors polled by JPMorgan said they expect the Fed’s favorite inflation gauge—the core personal consumption expenditures (PCE) price index, which excludes volatile food and energy costs—to remain above 2% in 2024, but just 10% expect core PCE inflation of more than 3%.

Longer-term, professional investors are more concerned about domestic and international politics than they are inflation. The biggest threats to the global economy over the next 10 years, taking into account both their probability and potential impact, are war (33%), populism (29%), and deglobalization (18%), according to JPMorgan’s poll.

Chang and her team said that “it is not surprising” that war is seen as one of the biggest threats to the economy given the ongoing conflicts in Ukraine and the Middle East. And while populism, and the political polarization that comes with it, may seem like a more unexpected threat to the global economy, they noted JPMorgan has been warning about the risks of populism for a while now.

“As we’ve written previously, in our view, populist politics have gone mainstream and are here to stay due to structural social shifts,” Chang and her team wrote, warning that “populists-led countries could see lower growth, trade and financial openness and higher debt-to-GDP over the long term.”

This story was originally featured on Fortune.com