Bank of America strategist warns of risk asset pressure if bond plan fails

The US government’s borrowing costs are flashing warning signs that even the most committed risk-on investors are finding hard to ignore. Bank of America’s chief investment strategist Michael Hartnett is sounding the alarm: if the Treasury can’t get long-term bond yields under control, the fallout will hit the dollar, equities, and virtually every asset class that thrives on cheap money. The 30-year Treasury yield recently crossed above 5% at auction, landing around 5.126%. That’s the highest level in roughly 25 years, a number that would have seemed absurd during the post-2008 era of near-zero rates. The math that keeps getting worse US national debt is approaching $40 trillion. Annual interest payments alone now run between $1.4 trillion and $1.5 trillion, a figure that rivals the entire defense budget and then some. Hartnett’s research suggests this trajectory could push total debt to $50 trillion by 2029 if fiscal policy doesn’t change course. Hartnett frames this dynamic through what he calls “Anything But Bonds,” or ABB. The thesis is straightforward: with yields this elevated and fiscal fundamentals this stretched, fixed income isn’t offering the safety it once did. Investor...