An outstanding note from Michael Hartnett at BofA beautifully captures 2025 dynamics.
The Biggest Picture: Treasuries entering 6th year of 3rd Great Bond Bear Market of past 240 years (Chart2); global shift to populism, rising US government debt (set to hit $40tn on 6th Feb’26, exactly 400 days into Trump 2.0), inflationary central banks; recession and/or default needed to reverse secular bond bear of 2020s.
Tale of the Tape: Fed’s inflationary Sept 50bps cut backfiring; extreme bull positioning (since record cash UW in Dec 17th BofA Global FMS only oil & US$ have bested T-bills)+tighter financial conditions (real rates >2.5%, long rates >5%, Euro@parity)…bondshocks in “weak fiscal links” (France, Brazil, now UK where speed of gilt yield rise & sterling fall faster than Oct’22 Truss event of Oct’22-Chart 2)+ stealth equity sell-off (LatAm, France, REITs, materials, banks, homebuilders all down10-20% since Q4 highs).
