Bank of America: The early year rally in US stocks is "losing steam" and its global leadership position is weakening.

U.S. Bank strategists predict that after a temporary pause in early 2025 following its continued rise, the U.S. stock market will continue to lose its leading edge. Strategists including Michael Hartnett have pointed out that so far this year, the returns on stock markets in countries such as Brazil, Germany, the UK, China, and Canada have been higher than the Wall Street S&P 500 index, and the seven giants of the past strong U.S. stock market have not been able to provide the momentum they have historically offered. The U.S. Bank strategists also noted that the argument that the U.S. economy is structurally superior to its competitors is fading, and investors are betting on geopolitical stability in the Middle East and Ukraine. Additionally, as they do not expect an escalation in the U.S.-China trade and tech war, they recommend buying Chinese stocks. The Hartnett team stated that stocks in most regions are in a "state of outperformance compared to the U.S." However, they warned that following the German election in a few weeks, if Russia and Ukraine begin peace negotiations this month or next, investors may take profit-taking measures on European stocks. On the bond front, U.S. Bank expects U.S. Treasury yields to fall below 4%, as President Donald Trump hopes to address government spending issues, prevent a spiraling debt increase, and also have Congress approve his tax cut plan. Citing data from EPFR Global, U.S. Bank reported that in the week ending February 5th, money market funds attracted $46.8 billion in funds, with $16.6 billion flowing into bonds and $0.6 billion flowing out of stock funds.