Hedge fund managers have turned decidedly bearing on U.S. equities and the economy, according to a survey of 87 managers by TrimTabs Investment Research and BarclayHedge.

Thirty-eight are bearish on the S&P 500, up from 29% in May and at the highest level since February. Conversely, 27% are bullish, down slightly from 30% in May.

“Downbeat views on domestic stocks characterized the first half of 2011,” said Sol Waksman, founder and president of BarclayHedge. “Hedge fund managers were net bearing on the S&P 500 in four of the six months of the year. The grim mood coincides with weak performance. The Barclay Hedge Fund Index shows a year-to-date return of just 1.8% after increasing 10.9% in 2010.”

Hedge fund managers’ outlook on the U.S. dollar improved, however, with bullish sentiment holding stead at 29% from April through June, but bearish sentiment fell from 44% three months ago to 24% in June.

In contrast, managers are much more pessimistic about U.S. Treasuries, with bearish sentiment on the 10-year note surging to 44% in June from 34% in May. The bullish sentiment, however, remained steady at 18%.

“Hedge fund managers may not like Treasuries, but our flow data shows that investors of all stripes are not shying from bonds,” said Vincent Deluard, executive vice president at TrimTabs. “Bond mutual funds, bond ETFs and fixed income hedge funds continue to post sizable inflows. Meanwhile, hedge fund managers tells us that they aim to increase leverage in the coming weeks, even though they are relatively downbeat on stocks. Aggressive bets from this crowd could support equities in the second half of the year.”

Further, 74% of hedge fund managers do not expect the Fed to deliver more quantitative easing. Sixty-four percent are bracing for weaker corporate earnings in the coming two quarters, and 39% forecast the economy will slip into recession in the next year.

“The recent correction in stock prices gave rise to fear,” Deluard said. “Margin debt decreased for the first time in 11 months, short interest increased to the highest level in six months, and the speculative crowd turned net sellers of equity futures. But equities have rebounded smartly because recent economic data shows that the soft patch was not the start of something more series, and we are interested to see how managers adjust.”