Nov. 27 at 4:30 PM
Investors are pricing in an “ideal” global macro backdrop, with asset valuations near record highs and yield curves converging, according to BofA analysts. They say low volatility and curve convergence reflect a benign environment of bottoming growth and steady central-bank policy, though risks remain.
BofA warns volatility could rise as markets better assess AI’s medium-term impact on growth, inflation, and near-term capex. This year’s equity rally has been driven by AI optimism, but stretched valuations and uncertain returns on debt-funded tech capex are emerging concerns.
The AI-driven stock surge has become a hallmark of today’s “K-shaped” post-pandemic recovery, where high-income groups and tech prosper while lower-income households and non-tech sectors face persistent financial strain. This divergence complicates fiscal-monetary coordination and fuels debate over the dollar’s long-term reserve-currency status.
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