Bank of America analysts argue that equity markets are capable of withstanding more severe bond market shocks than those seen so far in 2026. They suggest that volatility may currently be a better indicator of risk than Treasury yields. The bank reassures clients that bond yields would need to spike significantly higher to truly derail the AI trade, citing strong earnings growth in the sector that is outpacing share-price appreciation, leading to smaller price-to-earnings multiples. Based on its proprietary “bubble risk indicator,” the bank remains relatively untroubled about U.S. stock indices, expecting equities to quickly rebound from any pullback.