With the most realistic risk facing the stock market right now Point to the bon

3rd V: Vigilantes

With the most realistic risk facing the stock market right now
Point to the bond market.

BofA after Kevin Wash emerged as Fed chairman candidate
It is noted that the yield curve on U.S. government bonds has flattened quickly.

This means that the market is more interested in inflation than growth
This means that they are starting to worry more about the possibility of a rate hike.

In particular, the gap between 2-year and 10-year interest rates has been greatly reduced
The monetary policy in the future is more than expected
It is interpreted as a warning that it could turn much tighter.

More important is the relationship between the job market and prices.
Historically, unemployment is higher than CPI
If it goes down to a low level
Most were followed by a reversal of the yield curve or a slowdown in the economy.

Right now, the U.S. economy is still experiencing strong employment and
We're in a prosperous phase thanks to high asset prices
And behind the scenes, inflationary pressure
It continues to accumulate.

From the perspective of BofA's investment clock
The economy is already in the second half of its prosperity phase
It is gradually moving into a stagflationary phase.

And you can turn the tide around
Oil prices are cited as the most important variable.

Due to increased AI investment and higher asset prices
There's a lot of liquidity in the economy as a whole

A factor that can offset this is
In the end, the logic is that energy prices will only fall.

If oil prices fall sharply
Inflationary pressures are easing
The CPI is back below 3%
The interest rate burden could also be reduced.

That will ease the stagflation concerns
There is a possibility that the economic expansion phase will last longer.

On the contrary, oil prices remain high
If it rises again, inflation will re-accelerate
The bond market will demand higher interest rates.

Eventually, the bond vigilantes moved
It is a structure that puts pressure on the valuation of the stock market.

So, Heart Net is
There's a huge influx of money supporting the market right now
I think we should be wary of strong investor sentiment.

Investors' optimism is going to the extreme
The situation where the funds keep flowing in
Historically, at the end of the bull market
It is a phenomenon that has appeared frequently.

In the end, the core of the third V is
The market's biggest enemy right now is geopolitics
It's not performance, it's the bond market and inflation
Oil prices are at the center of it.

It's also paradoxical to the market
The fact that the money keeps pouring in
Rather, it could be a red flag, the BofA warns.