Bank of America CorpHartnett's warning of short selling against financials if bond plan fails pressures BofA stock.
Bank of America strategist Michael Hartnett warns that if the US Treasury's plan to tame long-term bond yields fails, the dollar will weaken and investors will increase short bets against riskier assets ahead of November midterm elections. Hartnett says if Treasury Secretary Scott Bessent cannot drag the 30-year yield below 5%, he foresees a dollar slump and more short selling against AI hyperscalers, private credit, and financials. He describes the Treasury's proposal to increase buybacks of longer-dated bonds as quasi quantitative easing and the latest in a series of Bessent puts to protect US government and AI financing. The 30-year yield was around 5.2% on Friday after reaching its highest in almost two decades, and the S&P 500 is down 1.9% since Monday. BofA's bull-and-bear indicator still shows an extreme bull reading, with US stock funds attracting almost $29 billion in the week through August 19, while semiconductor outflows extended for a third week to $6.3 billion.
Bank of America CorpHartnett's warning of short selling against financials if bond plan fails pressures BofA stock.
Treasury's plan to increase buybacks aims to lower yields; failure would keep yields high, but current yield around 5.2% suggests pressure.