BofA's Hartnett Warns on U.S. Stocks, Flags Midterms, French Debt and AI Financing as Key Risks

Bank of America strategist Michael Hartnett cautioned investors to stay defensive on U.S. equities and the dollar until mid-November, citing three unresolved risks: the U.S. midterm elections, turbulence in the French government bond market and AI financing conditions. He expects the 30-year Treasury yield to fall toward 5% and the dollar index to slip below 100. BofA's latest Flow Show report showed global equity funds drew $55.6 billion last week, with tech funds taking $18.8 billion — the largest weekly inflow since July. The Bull & Bear indicator slipped to 7.2 from 7.4, while consumer and utility funds posted their second-largest weekly outflows on record at $2.1 billion and $1.6 billion respectively. On France, the 10-year OAT-Bund spread has widened to 180 basis points, near the 189-basis-point peak of November 2011. BofA flagged hyperscaler credit spreads breaching 200 basis points — currently about 130 — as a major downside risk, warning that tighter AI financing could force deleveraging across credit markets.