Bank of America’s Hartnett sees Democratic sweep boosting bonds as contrarian fourth-quarter play

Michael Hartnett, Bank of America’s chief investment strategist, is flagging a trade most of Wall Street isn’t thinking about: buying bonds. His thesis hinges on a political scenario that prediction markets are starting to take seriously, a Democratic sweep in the November 2026 midterms that could upend the current risk-on consensus and make Treasuries the surprise winner of the fourth quarter. The market’s default assumption right now is that Democrats won’t take control. Hartnett thinks that complacency is creating a setup where bonds become an asymmetric bet if the political winds shift. The ABB problem and why bonds look interesting again Hartnett has long operated under what he calls the “Anything But Bonds” framework. The logic has been straightforward: with US debt approaching $40 trillion and annual interest payments running between $1.4 trillion and $1.5 trillion, Treasuries have been the asset class nobody wanted to own. Thirty-year Treasury yields are currently sitting near two-decade highs. Treasury Secretary Bessent has set a target to bring 30-year yields below 5%, but getting there requires either a meaningful economic slowdown or a political catalyst that reshapes f...