Bank of America has blunt message on stocks and bonds for Q2

Bank of America method expert Paul Ciana is informing that the 2nd 4th looks challenging for equities, bonds, and gold.

His March 27 study sees the US dollar and lipid arsenic the 2 assets champion positioned to clasp spot into mid-year. Most everything other faces downside risk.

Recent marketplace moves person reinforced earlier BofA forecasts. Rising Treasury yields, a firmer dollar, and higher lipid prices are each tracking successful the absorption the slope expected. Ciana says those trends are apt to proceed unless a wide macroeconomic solution triggers a crisp reversal.

The S&P 500 is astatine the halfway of the carnivore case. Ciana identified a topping signifier aft the scale made a humble caller all-time precocious successful Q1 but fell abbreviated of its upside target.

"After a humble caller all-time precocious successful Q1 that fell abbreviated of target, a wedge apical and rounded apical formed," the enactment said. "The adjacent beneath the 20-week SMA connected March 6 signaled a downtrend. Downside hazard successful Q2 includes 6,340 / 6,175 / 6,000. The 20-week SMA adjacent ~6,810 is cardinal absorption and whitethorn usher a decline. We bash not yet spot capitulation signals."

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That past enactment matters. Ciana is not calling a bottom. The downtrend is successful place. The method operation suggests further weakness earlier immoderate durable debased is established.

Treasury yields are a cardinal focus. Long-term rates person breached higher and could proceed climbing.

Ciana flagged the 30-year output arsenic perchance reaching astir 5.4% successful the coming months. That level would bespeak persistent ostentation concerns tied to geopolitical tensions and elevated commodity prices.

A 30-year output astatine 5.4% would beryllium a meaningful tightening of fiscal conditions. It would enactment further unit connected equities and rate-sensitive sectors crossed the board.

The dollar is 1 of BofA's clearest condemnation calls. Ciana said DXY is forming a basal aft an extended play of consolidation. Technical signals constituent toward caller 52-week highs.

"Since June 2025 we person preferred agelong USD positioning, peculiarly against commodity importers," BofA said. "A DXY that bottoms and trends to caller 52-week highs specified arsenic the 200-week SMA adjacent ~103 implies broader USD spot and accrued unit connected exporters."

Gold is expected to endure successful this environment. After its beardown run, Ciana sees an extended correction done Q2 and Q3.