Bank of America strategist: This year's performance of 'peaceful trading' is better than 'conflict trading', investors need to focus on three key indicators

According to BlockBeats, on May 19th, Michael Hartnett, a strategist at Bank of America, fulfilled the first half of his prediction about "buying rumors, selling facts": last Friday he predicted that the S&P 500 index would soar after the trade agreement framework was announced, and then the index did indeed soar by 5%. When the market is shaking (or soaring for days) in the headlines of tariffs, Hanette has set his sights on the 'next big opportunity'. He concluded by analyzing the best and worst performing assets in 2025 that 'peace trading' performed better than 'conflict trading'. Hanette reminds investors to keep a close eye on three key levels: 5% of the 30-year US Treasury yield, 100 points of the US dollar index, and 5000 points of the Philadelphia Semiconductor Index (SOX). If the combination of US bond yields and the US dollar experiences another "yield rise, dollar fall" (especially when Trump fails in the long-term US bond market), US stocks may face the next round of selling. However, Hanette believes that a 5% yield is still the current line of defense (if lost, retreat is necessary). At the same time, the aversion of funds to long-term assets has reached its peak - the ratio of biotechnology ETFs (XBIs) to broker ETFs (XBDs) has fallen to the lowest level since October 2007, highlighting the deep-rooted consensus of "buying everything except bonds". Hanette predicted in the report that emerging market stocks will become the core engine of the new bull market, supported by three cornerstones: the weakening of the US dollar, the peak of US bond yields, and the driving force of the Chinese economy. Despite the improvement in market breadth (84% of MSCI index components hit the 50/200 day moving average, approaching the oversold threshold of 88%), Bank of America's "bull/bear" indicator remains at 3.6, indicating that sentiment has not yet overheated. Hanette warns that bond yields will reveal the ultimate outcome of US policy: will it repeat the "inflationary peace dividend" of the 1970s (stagflation, protectionism), or the "deflationary peace dividend" of the 1990s (globalization, central bank independence)? He tends to see a decline in US bond yields and deflation by 2025, but Moody's removal of the US AAA rating has cast a shadow over the long-term bond market. (Golden Ten)