Bank of America Corp. strategist. Michael Hartnett repeated his call to sell U.S. stocks, saying technology and artificial intelligence are forming a bubble and that the Federal Reserve’s rate hike may not end, with rising bond yields a risk.

If the Fed “mistakenly” halts rate hikes this year, U.S. bond yields would reflect that, rising above 4 percent. The yield on 10-year U.S. Treasuries traded at about 3.6 percent on Friday, jumping over the past week amid a debate over the government debt ceiling.

The BofA said MA is still a “baby bubble,” noting that bubbles in the past have always started with “easy money” and ended with rate hikes. They cited a lesson from 1999, when a rally in Internet stocks and strong economic data forced the Fed to resume tightening monetary policy, and a bubble in tech stocks burst nine months later.

According to strategists, the biggest “pain deal” over the next 12 months is a Fed funds rate hike to 6% instead of a 3% cut, given that the market expects rates to fall.

U.S. stocks rose Thursday as optimism about steps to address Washington’s debt limit outweighed worries that the Fed might not suspend its rate hike campaign next month. The Nasdaq 100 Index soared to its highest level since April 2022, and its 14-day relative strength index closed in overbought territory for the first time since early February. The index is up 26% this year, one of the best performers among global indices.

According to BofA, citing data from EPFR Global, technology stocks saw their fifth week of fund inflows, while financial companies saw no outflows for a third week, and REIT funds saw their largest withdrawals since November 2022.

Overall, equity funds churned out $7.7 billion in the week through May 17, while bonds have had inflows for the past eight weeks.