Eventually, stocks will correct.

That was one message from BofA’s Michael Hartnett who, in the latest installment of the bank’s weekly “Flow Show” series, suggested the panic grab into stocks, and particularly tech, semi and AI-related names, will be “fully complete” by “early-June.” That’s when the market will be “ripe” for profit-taking.

I don’t disagree, but… well, I just hope everyone was onboard since late-March, because the low-to-high in Nasdaq 100 futures was nearly 30%.

A day on from yet another new S&P record, investors were back to fretting about inflation and bond yields. The latter were higher across the developed world Friday.

In the US, twos were north of 4.05%, which is to say 40bps above EFFR (and IORB).

Forgetting whatever you want to guesstimate for a two-year term premium, this is the market effectively saying short-term US rates will be at least “one hike higher,” if you will, on average, over the next couple of years, and maybe more.

One big short-end rally — say, a cliff-dive moment for headline payrolls or a lasting détente in the Mideast — could change the situation overnight, but as it stands, this is another manifestation of the Kevin Warsh “in a pickle already” situation discussed here earlier this week.

The long bond gets all the attention (5% makes for good macro-market clickbait), but note that two-year US yields are up 50bps in 2026, far eclipsing the scope of the long-end selloff.

Indeed, we’re now looking at ~35bps of 2s30s flattening YTD, nails on a chalkboard for those betting on a Warsh bull steepener.

In addition to what that says about the prospects for rate cuts (traders were pricing in better-than-even odds of a Fed hike this year early Friday, matching the hawkish extremes from late March), it’s an annoyance for Scott Bessent if he wants to fund at the front-end.

“Obviously US inflation remains ‘too damn high’ and is going ‘wrong-way,'” Nomura’s Charlie McElligott said, referencing this week’s back-to-back heaters (CPI and PPI).

“Despite the desires of the new incoming Fed Chair,” the potential for hikes across the rest of the developed world, particularly in economies where central banks run single-mandates, “has picked up real delta, and that’s beginning to seep into Fed pricing, which means USD rate vol could be a problem again for equities at some point in the next month or two,” McElligott went on. “Especially when the US economy is already closer to overheating than it is recession.”

On that latter point (about the US economy), early tracking on the Atlanta Fed’s popular GDPNow model reflects a 4% real growth pace for the US economy so far in Q2.

On Charlie’s first point (about the knock-on effect from ex-US DM rates for Treasurys and Fed pricing), gilts took it on the chin again Friday, as markets braced for Manchester Mayor Andy Burnham to eventually challenge the embattled Keir Starmer for his place at No. 10.

(Burnham’s running for a newly-vacant parliament seat. Once seated, he can try to oust Starmer. The market worries Burnham’s on-the-record remarks about the bond market presage reckless fiscal policy.)

30-year UK yields hit a fresh 28-year high headed into the weekend and 10-year yields were the highest since 2008. In Germany, 10-year yields hit a 15-year high while in Japan, 30-year yields reached 4%, a level not seen in decades.