The Flow Show: Strife Begins at Forty

BofA's weekly Flow Show argues that US national debt will surpass $40tn within days and reach $50tn by 2029, with $1.4tn of interest cost over the past 12 months likely to keep rising unless 5-year Treasury yields fall below 3.25%, reinforcing an Anything But Bonds allocation. The report retains its 2020s framework: ABB, ABC (Anything but China), ABD (Anything but the Dollar) and all-in on AI. Weekly flows showed $25.4bn into cash, $23.8bn into bonds, $16.1bn into equities, $6.3bn into gold and $0.3bn into crypto; China equity outflows reached $14.5bn, the largest since May 2026, while Europe equities drew $1.2bn and tech lost $1.2bn. The Bull & Bear Indicator fell to 9.3 from 9.7 but positioning remains excessively bullish. Recommended trades include long REITs/XBI/KRE/small caps, long Hong Kong property, long gold and short AI bonds, with investors focused on Jackson Hole, the September FOMC and the US midterms.