BofA strategist Michael Hartnett expects risk-off sentiment to linger into November

Bank of America strategists are indicating that the market’s current risk-off tone may not fade quickly. In a market note flagged by Yahoo Finance on Oct. 23, Michael Hartnett pointed to a continued preference for safety that he expects to persist until mid-November.

Hartnett’s view, as described in the report, frames the drawdown risk as partly tied to ongoing discomfort around the AI trade. “AI” in this context refers to investor exposure to companies and themes tied to artificial intelligence, including technology hardware, software, data infrastructure, and related supply chains. The strategist’s warning suggests that enthusiasm for that theme has become more fragile and that investors may remain cautious about adding to risk positions.

The same note also connected the near-term sentiment picture to uncertainty around the US midterm cycle. With US politics often influencing expectations for regulation, fiscal spending, and broader economic policy, Hartnett’s comment implied that the timing of political events could reinforce a wait-and-see posture among investors.

While the report circulated by Yahoo Finance points to Hartnett’s expectation for a prolonged risk-off mood, it did not lay out specific forecasts for rates, inflation, earnings, or credit metrics in the excerpt available here. It also did not provide detailed sector-level recommendations or scenario probabilities.

For Bank of America, the strategist’s comments fit into a broader pattern where large Wall Street institutions repeatedly emphasize macro timing, positioning, and liquidity as drivers of whether markets move from caution back into risk-taking. In this case, the message is less about a single data release and more about the persistence of sentiment.

The key question for investors is whether the market’s caution is rooted in valuation and positioning around AI-linked exposures, or whether it reflects a wider macro shift that would keep investors defensive even if AI-related headlines improve. Hartnett’s mid-November horizon suggests he sees a near-term window where risk appetite is likely to remain constrained, rather than snapping back immediately.

Still, much remains unspecified in the circulated post. The excerpt does not include quantified expectations, nor does it detail which asset classes Hartnett would most expect to outperform or underperform during the risk-off stretch. It also does not clarify whether the forecast depends on particular catalysts, such as specific policy announcements or economic data releases.

For market watchers, the most immediate point to watch is whether investor behavior begins to change before mid-November, for example through improved credit spreads, reduced volatility, or a broadening of participation across sectors. If risk sentiment stays defensive through the indicated window, it would reinforce the idea that the AI trade’s momentum and the political calendar continue to be central drivers of market psychology.