BofA's Hartnett warns of impending stagflation risk this autumn, citing a convergence of triple pressures.
Bank of America's Chief Investment Strategist, Michael Hartnett, noted in his latest "Flow Show" report that record diesel prices, the 30-year U.S. Treasury yield surging to its highest level since 2007, and productivity concerns amid the AI boom are collectively creating stagflation risks for the autumn. He identified the Transportation ETF (IYT) as a key indicator to watch, stating that a break below its 200-day moving average support at 80 points would confirm a stagflation scenario. Hartnett emphasized that the diesel crack spread has hit a record $102 per barrel, with retail prices reaching $6 per gallon, representing the core pressure point for the real economy. Fund flow data shows that over the past three weeks, average weekly net inflows into U.S. equities were only $7 billion, a significant contraction from July, with U.S. stocks recording a net outflow of $14.2 billion. During the same period, global bonds attracted $17.5 billion, and cryptocurrencies saw inflows of $1.3 billion, with cumulative net inflows of $6.8 billion over the past six weeks.
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