Bank of America advises clients to buy long-duration U.S. government debt

In the United States, Bank of America's chief investment strategist Michael Hartnett made a notable contrarian recommendation to clients on May 23, 2025. He suggested that investors embrace long-duration U.S. government bonds, which have been underperforming in recent times, particularly the 30-year bonds yielding over 5%. Hartnett associated the current sentiment towards these bonds with historical patterns of investor behavior, likening it to the stock market's performance in February 2009. The firm observed that long bonds are currently experiencing significant yield levels similar to those seen in the late 2023 period, just before the dot-com bust. Hartnett elaborated that the bearish sentiment towards bonds is well-documented and may not be reflective of their true value. Reasons for the drop in bond demand include inflation concerns stemming from tariff policies initiated during President Donald Trump's administration, ongoing fiscal issues in Washington, and the Federal Reserve's decision to cut interest rates by a substantial margin during 2024. Following these rate cuts, the long bond yield has seen nearly a full percentage point increase, indicating a shift in investor priorities. Despite the downturn in sentiment, Hartnett highlighted that this juncture presents a potential buying opportunity for discerning investors. He noted that rates above 5% might attract interest as it signals a reaction against an unsustainable debt path. Hartnett termed this investment strategy as