BofA strategists: Global risk aversion may persist until mid-November, short-term risk release not yet complete.

BlockBeats news, October 23 - Bank of America strategist Michael Hartnett believes that the current risk-off sentiment in global markets may persist until mid-November. He remains tactically cautious on risk assets until three uncertainties—AI financing risks, pressure in the French bond market, and the U.S. midterm elections—subside. In a Friday client note, Hartnett wrote that BofA will "maintain a tactical risk-off stance until mid-November," and expects this phase could simultaneously see a combination of "falling yields, falling stocks, and a weaker dollar."

Hartnett believes that one important signal that could truly improve risk sentiment is credit spreads related to AI hyperscalers peaking. He believes that if large AI companies proactively cut capital expenditures, or reduce debt pressure through large-scale equity financing, either could become a catalyst for credit spreads to peak. Hartnett believes that if the European Central Bank or the French government takes measures that can reverse the sell-off in French government bonds, it would help restore global investors' risk appetite. Hartnett believes the market has not fully priced in the scenario of Democrats winning both the House and the Senate. If this outcome occurs, he believes the Trump administration's current low-tax, low-regulation environment could be constrained, which would be unfavorable for corporate earnings expectations.

Hartnett's core judgment is not that U.S. stocks have already entered a long-term bear market, but that the short-term release of risks has not yet been completed. In his view, AI credit spreads peaking, a credible policy turning point in the French bond market, and the completion of repricing of U.S. midterm election risks are the three more important signals for judging whether risk appetite has truly recovered.