Investors are increasingly confident that the global economy is headed for a so-called soft landing, where inflation falls toward the Federal Reserve's target without high interest rates sending the economy into a tailspin.

In Bank of America's July Global Fund Manager Survey, released on Wednesday, 68% of respondents said a soft landing is the most likely outcome for the global economy in the next 12 months. This marked the highest percentage of respondents siding with such an outcome since January 2024. It tied for the second-highest reading in the past year.

The call for a soft landing is in line with how fund managers are currently evaluating the balance of risks to markets. For the first time in six months, inflation wasn't the No. 1 risk listed by respondents. (Geopolitical conflict took the top spot this time.)

The 585 respondents were surveyed between July 5 and July 11, meaning the last day of the survey coincided with a surprisingly positive reading on the Consumer Price Index (CPI) for June. That means many of the respondents may have submitted answers to questions before the inflation print that has recently sent markets roaring.

But the shift is still notable and is the latest sign that markets are becoming more optimistic about the US economy, reaching the start of Federal Reserve interest rate cuts without significant deterioration in economic conditions.

On Tuesday, markets began pricing in a 100% chance the Fed will cut interest rates by the end of its September meeting. This sentiment has contributed to a broad stock market rally, with investors rotating out of the high-flying technology stocks of the past year and into more interest-rate-sensitive sectors of the market.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

In the past five trading sessions, the equal-weight S&P 500 (^SPXEW), which ranks all stocks in the index equally and isn't overly influenced by the size of the stocks moving higher or lower, has outperformed the traditional market cap-weighted S&P 500.

Real Estate (XLRE) and Industrials (XLI), both interest-rate-sensitive sectors, have been the market's biggest winners over the same time period, rising about 5%. Meanwhile, Technology (XLK) and Communication Services (XLC) are the only sectors with negative returns.

Since the inflation report on July 11, the Russell 2000 (^RUT) is up more than 11% in the past five trading days, including a more than 3% bounce on Tuesday alone. Meanwhile, in that period, the S&P 500 (^GSPC) is up just 1.5%. That means the small-cap index has outperformed the benchmark index by nearly 10 percentage points, the highest five-day outperformance on record, per Bespoke Investment Group.

"The fact that the Russell 2000’s recent rally is both statistically and historically unusual tells us investor sentiment has shifted dramatically and the move very likely has further to run," DataTrek co-founder Nicholas Colas wrote in a morning note on Tuesday.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices.

Read the latest financial and business news from Yahoo Finance