Market briefs

Breaking insights on the economy, market volatility, policy changes and geopolitical events


November 1, 2023

Getting comfortable with “higher for longer”

HFL STANDS FOR “HIGHER FOR LONGER,” and it doesn’t just apply to interest rates anymore, says Joe Quinlan, head of CIO Market Strategy. Given the tight labor market, strong wages and elevated energy prices, it’s unlikely rate cuts will come any time soon, Quinlan explains. Markets and investors have pretty much accepted that fact. But the HFL trend also applies to a number of other areas that could affect the markets and your investing decisions. Among them: global energy prices, defense spending and the U.S. deficit.


Watch the video above for what these higher-for-longer trends could mean for your portfolio. For more insights, read “Higher-for-Longer Goes Beyond Interest Rates: What Investors Need to Know” in the October 10, 2023 Capital Market Outlook and tune in to the CIO’s Market Update audiocast series for weekly insights on the markets and economy.




October 27, 2023

What rising geopolitical risks could mean for your investments

THE CONFLICT IN THE MIDDLE EAST has pushed already-simmering global tensions to their highest level in recent memory. “Geopolitics used to be considered a lower-level financial risk. Now, it may be the top risk,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. “In addition to the overriding humanitarian concerns, the terror attack in Israel, the continuing conflict in Ukraine and tension in the Indo-Pacific create a new level of uncertainty and raise urgent questions about the potential impact on the economy and financial markets,” he adds.


In the video above, Hyzy discusses potential impacts on the global oil supply, individual industries and corporate earnings, and suggests steps you might consider now to help maintain progress toward your goals. In the midst of rising geopolitical tension, “stay balanced, think long term, and keep a high level of diversification across and within asset classes,” he says. If you work with an advisor, now might be a good time to reach out for a talk.

For a deeper look at the impact of heightened global risks, read “What rising geopolitical tensions could mean for the markets and economy,” a Q&A with leading analysts across the Chief Investment Office and BofA Global Research. And keep up with our latest insights by tuning in regularly to the CIO Market Update audiocast series.




October 20, 2023

Welcome tax relief for retirement savers of all ages

IF YOU’RE SAVING FOR RETIREMENT or have an inherited retirement account, the IRS recently announced a few changes that could affect your finances — in a good way. Among them, a SECURE Act 2.0 provision putting an end to pre-tax catch-up contributions for high earners, scheduled to kick in next year, has been postponed, reports the National Wealth Strategies team in the Chief Investment Office (CIO). Other provisions slated for 2024 create new opportunities to save more. And, in 2023, there’s a reprieve on penalties for heirs who neglected to take required minimum distributions (RMDs) from inherited retirement accounts. Below are the highlights.

“Good news for those 50 and over: The IRS has postponed a SECURE Act 2.0 provision ending pre-tax catch-up contributions for high earners in 2024..”


Contribution rule changes for 2024

For younger savers. The resumption of student loan payments this month could crimp younger investors’ ability to save for retirement.  As one possible remedy, starting in 2024, employers will have the option to “match” employee student loan payments with contributions to a retirement account, thanks to SECURE Act 2.0. Also kicking in in 2024, certain unused funds in a 529 education savings plan could be rolled over into a Roth IRA in the beneficiary’s name without Federal income tax or the usual 10% penalty for non-education withdrawals.

For older savers. High-earning savers 50 and over have gotten a two-year reprieve from the SECURE Act 2.0 rule limiting their ability to make catch-up contributions using pre-tax income.

As background, SECURE Act 2.0 had mandated that, starting in 2024, workers earning more than $145,000 in the prior year would have to make their catch-up contributions to a Roth plan, using post-tax rather than pre-tax dollars. Yet due to the complexities of implementing the new rule, the IRS has determined those high earners can continue to make their contributions to traditional retirement plans using pre-tax dollars through 2025.

Penalty relief on RMDs for inherited plans

The IRS’s “10-year rule” for inherited IRAs enables many beneficiaries to take full distribution of an inherited retirement account within a decade, with no required minimum distributions needed in any specific year. However, if the person you inherited a retirement plan from died on or after their “required beginning date” for taking RMDs, you may have to take annual RMDs during that 10-year period. Amid some confusion on the part of beneficiaries, the IRS has determined that those who have overlooked this annual distribution requirement won’t be subject to penalties for 2023. (A previous IRS notice provided relief for 2021 and 2022).

You can learn more about this and other recent RMD changes by reading the recent CIO report, “Tax Alert 2023-04: IRS again provides relief for required minimum distributions for certain beneficiaries.”  But keep in mind that these provisions are highly complex, with many variables, so be sure to speak with your tax professional before making decisions.




September 26, 2023

What could a government shutdown mean for investors?

RIGHT NOW ALL EYES ARE ON WASHINGTON and whether the necessary discretionary-spending appropriation bills or a stop-gap bill can be signed before midnight on September 30 to avoid a government shutdown. Investors, of course, are wondering what the impact might be on the markets and economy.


Though serious events, shutdowns have historically been less concerning from an economic and market perspective than you may imagine, says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. It’s also important to remember that mandatory spending, such as Social Security and Medicare payments, would continue in the event of a shutdown. Watch the video above for more insights and be sure to check back for updates.

You’ll find an interesting chart highlighting the market effect of the last 20 government shutdowns in the September 18, 2023 Capital Market Outlook from the CIO. For more timely market commentary, tune in to the CIO Market Update audiocast series.




September 18, 2023

Beyond renewable energy: More ways to invest in the environment

AS CLIMATE RISKS INCREASINGLY dominate the news, investors are looking for ways to support environmental solutions and their personal financial goals. While you may already have invested in the transition to a low-carbon economy through renewable energy, “new opportunities are arising in less-publicized sustainable investment themes such as water, sustainable agriculture and biodiversity,” says Sarah Norman, head of ESG Thought Leadership for the Chief Investment Office (CIO), Merrill and Bank of America Private Bank. Below, she discusses these ideas for Climate Week.

Sarah Norman, head of ESG Thought Leadership, Chief Investment Office, Merrill and Bank of America Private Bank next to his quote “With water scarcity challenging nearly every continent, investment opportunities increasingly focus on protecting earth’s most important resource”


Hydrating your portfolio

“With water scarcity challenging nearly every continent,1 investment opportunities increasingly focus on protecting earth’s most important resource,” Norman says. That’s good news for the planet and for investors. Opportunities to consider include dedicated water funds focused on infrastructure, innovative technologies and water access, or broader sustainable and climate funds that incorporate potential water-related solutions. And bond investors will find a growing array of water-focused green bonds. Investors can also determine whether individual companies pose special risks or opportunities based on their water use. “Water-efficient companies trade at higher multiples than less efficient peers,”2 she adds.

Feeding the world, sustainably

While agricultural advances have greatly reduced food shortages, agriculture and other land-use industries account for 24% of global greenhouse gas emissions,3 and agriculture uses 70% of freshwater worldwide.4 “We must feed a growing population while using less water, preserving plant pollinators and decarbonizing agriculture,” Norman says. Investors might consider agriculture-specific funds, as well as broader environment-focused funds that invest in themes like clean energy, water infrastructure and waste management, she suggests.

Preserving life in all its varieties

Biodiversity, which refers to the variety of life globally and in specific regions and habitats, will be a top concern for businesses over the next decade, according to the World Economic Forum.5 “Some 85% of companies rely on natural resources or have significant impacts on ecosystems,”6 Norman says. “Companies that actively manage their impacts on biodiversity and ecosystems will likely be rewarded by the marketplace and may have access to new markets, partnerships and financing opportunities.” While investment options are currently limited, the market could exceed $400 billion within a decade,2 she adds. “We see this as an area to watch.”

For more on sustainable investing, read “Climate Risk and the Markets: 5 Key Questions Answered,” and “Sustainable and Impact Investing: More than just a feel-good approach.”


1 United Nations, “Water Scarcity,” 2021.

2 BofA Global Research, “ESG Matters – Global: Unlocking the value of biodiversity,” April 11, 2023

3 EPA, “Global Greenhouse Gas Emissions Data,” February 15, 2023.

4 The World Bank, “Water in Agriculture,” October 5, 2022.

5 World Economic Forum, ”Global Risks Report 2023,” January 11, 2023

6 S&P Global, “How the world’s largest companies depend on nature and biodiversity,” May 10, 2023.




August 28, 2023

Back to school loan repayments: Big test for borrowers and the markets?

FEDERAL STUDENT LOAN REPAYMENTS, suspended during the pandemic, are set to kick in again this fall after a three-year break, with first payments coming due in October. Already, 43 million borrowers, with estimated average monthly payments of $383,1 are beginning to rework their budgets, causing economists, retailers and investors to brace for a potential drop in consumer spending this fall.2


What could that mean for the markets and the economy?

“We believe the impact, while real, could be more modest than many expect,” says Emily Avioli, investment strategist in the Chief Investment Office (CIO) for Merrill and Bank of America Private Bank. Investors could consider defensive areas, such as consumer staples, over consumer discretionary stocks as spenders begin rethinking major purchases, she suggests. But, overall, “they should avoid overreacting.” Watch the video above for more insights.

How borrowers can prepare

As you begin to look for ways to adjust your budget to accommodate the renewed monthly payments, you could also review your repayment plan with your loan servicer. There are several options to consider, depending on your circumstances and income, and you can switch at any time.

In addition, the government has announced plans to  launch a new income-driven repayment plan, called the SAVE plan, that could reduce payments for some borrowers.3 Helping to ease the transition, the government has proposed  a 12-month “on-ramp” process, during which vulnerable borrowers who miss a payment won’t be considered delinquent, Avioli notes. In addition, “outside lenders may offer to refinance loans with longer terms and adjustable rates.”

For more on the potential impact of student loan repayments, read the CIO’s July 17 Capital Market Outlook.


1 Strategas, July 5, 2023.

2 Chief Investment Office, Merrill and Bank of America Private Bank, “Capital Market Outlook,” July 17, 2023

3, “Biden administration launches new income-driven student-debt repayment plan,” July 30, 2023.




August 3, 2023

Perspective for investors on the U.S. credit downgrade

FOR THE FIRST TIME IN MORE THAN A DECADE, a major ratings agency has downgraded the U.S. government’s long-term debt rating, from AAA to AA+.1

Why they did it: Fitch Ratings attributed Tuesday’s downgrade to the U.S. government’s “steady deterioration in standards of governance over the last 20 years”2 — for example, the lengthy debt ceiling battle that ended in June. Among other contributing factors: tax cuts, spending increases, plus rising costs for Social Security and Medicare.

John Donovan, head of Fixed Income, Chief Investment Office, Merrill and Bank of America Private Bank next to his quote “We believe the downgrade is unlikely to affect Treasurys’ position as a bedrock asset for investors.”


How markets are responding: “While some people were surprised by the news, these trends are well known by market participants and reaction thus far has been muted,” says John Donovan, head of Fixed Income in the Chief Investment Office for Merrill and Bank of America Private Bank.

Underlying strengths: “In our opinion, the government’s fiscal challenges, while real, are mitigated by the strength, competitiveness and diversity of the U.S. economy and the dollar’s role as international reserve currency,” Donovan says. Despite tempting comparisons to a similar downgrade by Standard & Poor’s in 2011, the current move comes as the economy is showing surprising resiliency, he notes. For example:

  • Second quarter real GDP growth is stronger than expected, at 2.4%, according to the Bureau of Economics Analysis.
  • Headline inflation is moderating, to 3.1% now compared with 9.1% a year ago.
  • “Of the three largest global economies — the U.S., China, and the European Union — the U.S. remains the most competitive and innovative,” Donovan notes.

Investor moves: While the government’s fiscal strength bears close scrutiny moving forward, this week’s news should not prompt sudden portfolio changes — not even in U.S. Treasurys. Says Donovan, “We believe the downgrade is unlikely to affect Treasurys’ position as a bedrock asset for investors.”

For a closer look at what the downgrade might mean, read the recent Investment Insights report from the CIO, “Fitch downgrades U.S. government.” For more on the markets and economy, tune in weekly to the CIO Market Update audiocast.


1 The Wall Street Journal, “Fitch Downgrades U.S. Credit Rating,” Aug. 1, 2023.

2 Fitch Ratings, “Fitch Downgrades the United States’ Long-Term Ratings to ‘AA+’ from ‘AAA’; Outlook Stable,” Aug 1, 2023.




July 20, 2023

Will midyear momentum carry us to a new bull market?

“DEFYING EXPECTATIONS, the markets and economy have proven extremely resilient so far this year,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. “We’ve seen some impressive returns for financial markets, inflation is trending lower and corporate earnings have largely held up.”

Chris Hyzy, Chief Investment Officer, Merrill and Bank of America Private Bank next to his quote “Whatever the months ahead have in store, don’t invest just for a recession.”


The second half — and beyond

For insights on what the rest of the year might hold for investors, read “Midyear 2023: What’s driving today’s resilient economy?” and watch our webcast, ”Midyear 2023: How to prepare for what’s ahead.” You’ll find useful insights from Hyzy and BofA Global Research’s head of U.S. Economics, Michael Gapen, as well as the Chief Investment Office’s head of Portfolio Strategy, Marci McGregor, and head of Fixed Income Strategy, Matt Diczok. Among other issues, they’ll weigh in on the probability of future rate hikes, the likelihood of a recession still materializing, cautionary signs to track, moves to consider now and investment opportunities to explore in the future.

“Don’t be surprised by periodic choppiness in the markets over the next few months,”  Hyzy cautions. “But we believe a new era of economic growth could emerge, leading to a more sustainable long-term bull market, as early as mid-2024.” Adjusting your portfolio as the markets and economy transition to this new cycle is paramount, Hyzy adds.

For help in making those adjustments, speak with your advisor and tune in to the CIO’s “Market Update” audiocast series throughout the year.




July 6, 2023

Tracking the elusive recession of 2023 — or is it 2024?

AT THE START OF 2023, MOST SIGNS seemed to point to a recession by summer. Well, summer is here, and the recession seems to be playing hide and seek.

Historically, the U.S. economy dips into recession an average of 15 months after the yield curve inverts — meaning when short-term bonds offer higher yields than long-term bonds. “That happened in March 2022. So, we should be there by now,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. Yet crucial parts of the economy have so far bucked the trend, and markets have been on a tear.

Have we skipped the recession and gone straight into a new period of growth? More likely, it’s a case of recession delayed, not avoided, as the economy works through the aftereffects of historic pandemic liquidity in unpredictable ways, says Hyzy. Forecasters now expect the recession may not arrive until early 2024, Hyzy notes.

Chris Hyzy, Chief Investment Officer, Merrill and Bank of America Private Bank next to his quote “Whatever the months ahead have in store, don’t invest just for a recession.”


Rollercoaster recession?

“As disruptions hit different parts of the economy at different times, we’re seeing what amounts to a series of rolling recessions, rather than one single downturn,” Hyzy says. While housing and manufacturing have already slowed, the service economy, consumer spending and the labor market have yet to follow suit.

As these areas cool in the second half of 2023, corporate earnings and hiring will likely slow down as well, Hyzy believes. Whether a recession is officially declared or not, investors should expect a softening economy and choppy markets for the balance of the year. Yet the rolling nature of the downturn should prevent a “hard landing,” he adds.

A new bull market on the horizon

What should investors consider as all these factors sort themselves out? High-quality stocks with reasonable valuations could help equity investors preserve and grow wealth amid the uncertainty, Hyzy says. “We’re emphasizing areas such as healthcare, energy and industrials, with solid technology stocks as well,” he adds. As consumer confidence and spending decline, consumer discretionary, materials and real estate may struggle.

“But whatever the months ahead have in store, don’t invest just for a recession,” Hyzy cautions. By mid-2024, with the economy, interest rates and inflation stabilizing, he expects the start of a new, extended bull market cycle driven by innovation and productivity.

For the latest on a potential recession timetable, read “Consensus pushes out recession,” in the June 26 Capital Market Outlook. And for more on recession and your portfolio, see the CIO report, “Timing and positioning for a second-half recession.”




June 30, 2023

Countdown to 2033: Can we fix Social Security?

SOCIAL SECURITY RECIPIENTS WORRIED they wouldn’t receive their benefits during the debt ceiling crisis. That issue was resolved when Congress passed the bill averting government default in early June. Yet larger problems threaten this retirement program, which has supported millions of Americans since the 1930s.

“At current funding and spending levels, Social Security could be insolvent by 2033, according to the Congressional Budget Office,” says Mitchell Drossman, head of National Wealth Strategies, Chief Investment Office, Merrill and Bank of America Private Bank. That’s a year earlier than projected by the Social Security trust fund’s board of trustees in their 2023 annual report.1

Mitchell Drossman, head of National Wealth Strategies, Chief Investment Office, Merrill and Bank of America Private Bank next to his quote “As baby boomers continue to retire, Social Security payouts are increasing a lot faster than contributions. In 2022 alone, the system posted a $22.1 billion deficit.”


Congress will face sizable pressure to prevent insolvency before then, Drossman adds. “Still, retirement savers should review their own retirement funding plans and stay aware of developments in Congress.” A recent Chief Investment Office report, “Social Security insolvency: What can be done and what’s at stake?,” answers key questions about projected shortfalls, possible solutions and what individuals need to know about their own benefits. Here are some highlights.

How is Social Security funded, and what is its current status?

Social Security funding comes mainly from employer and employee payroll taxes of 6.2% each (12.4% total) on wages up to $160,200 per year. The challenge: “As baby boomers continue to retire, Social Security payouts are increasing a lot faster than contributions,” Drossman says. “In 2022 alone, the system posted a $22.1 billion deficit.”2

What happens if the fund becomes insolvent?

That’s not fully clear, Drossman notes. Insolvency means that the trust fund is unable to pay benefits in full and on time. It does not mean that Social Security will be completely eliminated and unable to pay any benefits. But future benefits could only be paid from taxes collected, which would cover roughly 80% of benefits. While beneficiaries would still be legally entitled to their full scheduled benefits, the federal Anti-deficiency Act prohibits government spending in excess of available funds. Since current contributions wouldn’t meet the full obligations, recipients might receive timely but reduced payments or be paid in full but on a delayed schedule.

What are some potential fixes, and when do they need to be implemented?

A wide range of potential solutions have been proposed, including increasing the full retirement age, hiking the payroll tax on wages over a certain amount, and reducing benefits for higher lifetime earners. As for when a fix needs to be implemented, “the short answer is now,” Drossman says. Waiting until the brink of insolvency could place outsized burdens on contributors and/or beneficiaries a decade from now.

What should people planning for retirement consider?

Most proposals for Social Security solvency involve higher payroll taxes rather than cuts in benefits, Drossman notes. Still, the possibility of lower benefits provides another incentive to start saving early, invest in tax-advantaged retirement savings plans and boost your savings rate when you can. Whether you’re just starting out, nearing retirement or already there, your advisor can help you understand your options and strengthen your personal plan.


1 "The 2023 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds," March 2023.

2, 2022 and 2023 Trustees Reports.



Important Disclosures

Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.

Opinions are as of the date of these articles and are subject to change.

Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax, or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.

The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America") and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S" or “Merrill"), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).​  This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.

All recommendations must be considered in the context of an individual investor’s goals, time horizon, liquidity needs and risk tolerance. Not all recommendations will be in the best interest of all investors.

Investments have varying degrees of risk. Some of the risks involved with equity securities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad. Bonds are subject to interest rate, inflation and credit risks. Treasury bills are less volatile than longer-term fixed income securities and are guaranteed as to timely payment of principal and interest by the U.S. government. Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration. There are special risks associated with an investment in commodities, including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors.

These risks are magnified for investments made in emerging markets.  There are special risks associated with an investment in commodities, including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors.

Income from investing in municipal bonds is generally exempt from Federal and state taxes for residents of the issuing state. While the interest income is tax-exempt, any capital gains distributed are taxable to the investor. Income for some investors may be subject to the Federal Alternative Minimum Tax (AMT).

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You have choices about what to do with your 401(k) or other type of plan-sponsored accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth IRA, roll over a 401(k) from a prior employer to a 401(k) at your new employer, take a distribution, or leave the account where it is. Each choice may off er different investments and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment (particularly with reference to employer stock), and provide different protection from creditors and legal judgments. These are complex choices and should be considered with care.

Diversification does not ensure a profit or protect against loss in declining markets.

Sustainable and Impact Investing and/or Environmental, Social and Governance (ESG) managers may take into consideration factors beyond traditional financial information to select securities, which could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. Further, ESG strategies may rely on certain values based criteria to eliminate exposures found in similar strategies or broad market benchmarks, which could also result in relative investment performance deviating.


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