Bank of America’s chief investment strategist Michael Hartnett sees a powerful rotation in financial markets, with so-called “peace trades” now eclipsing “war trades” as the key driver of 2025 performance — a shift that could unleash the next bull market in emerging markets.
In his latest “The Flow Show” note shared Friday, Hartnett said a rare combination of falling oil prices, a weaker dollar, and a bond yield ceiling near 5% is reshaping the global investment landscape. The strategist cited a dramatic rally in emerging markets and sharp inflows to risk assets as signs of a growing consensus that diplomacy and disinflation are back in style.
‘Peace Trades’ Powering 2025 Market Leaders
“Big geopolitics = big price action,” Hartnett said, highlighting that Tel Aviv and Tehran stock exchanges have hit all-time highs, Poland’s market – tracked by the iShares Poland ETF (NYSE:EPOL) – is up 28%, and Russia’s ruble is the best-performing currency this year, gaining 41%.
The top-performing asset year to …