Stories
Bank of America Adopts Risk-Off Strategy Amid Rising Yields and Market Pressures
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CNBC TV18•19-10-2026, 06:33
Bank of America Adopts Risk-Off Strategy Amid Rising Yields and Market Pressures
- •Bank of America strategist Michael Hartnett outlined four key reasons for adopting a risk-off approach for the upcoming month.
- •Concerns include higher Treasury yields, the possibility of the Federal Reserve hiking rates, and stubborn inflation well above the 2 percent target.
- •Elevated oil prices driven by ongoing conflicts in the Middle East and Ukraine are adding to market instability.
- •Traders are increasingly factoring in a potential Democratic sweep in the upcoming midterm elections.
- •Recent weakness in artificial intelligence-linked stocks due to heavy debt issuance has further dampened market sentiment.
Key Questions Answered
Bank of America's strategist Michael Hartnett outlined four factors for the risk-off stance: expected Federal Reserve rate hikes, elevated oil prices due to ongoing wars, rising risks of a Democratic sweep in the midterms, and recent price action volatility in artificial intelligence-linked stocks.
The consumer price index rose 3.7% in September, while the producer price index posted its biggest annual gain since 2022 at 6.3%. Consequently, Treasury yields have stayed near multi-decade highs, with inflation remaining well above the Fed's 2% target.
Hartnett advised clients to add exposure to peak yield beneficiaries, which include small-cap stocks, real estate investment trusts (REITs), and consumer discretionary stocks.
