Trump-era geopolitics could drive U.S. energy prices lower: BofA’s Hartnett

Published 15/08/2025, 11:38
© Pavlo Gonchar / SOPA Images/Sipa via Reuters Connect

Investing.com -- Cash, stock, and bond funds drew the largest inflows in the week ended Aug. 13, while crypto and {{68|gold}} also saw allocations, Bank of America said in a new weekly report.

Cash funds attracted $33 billion, equity funds $26.4 billion, and bonds $25.9 billion.

Crypto saw $4.5 billion in inflows, while gold funds took in $2.6 billion.

Investment-grade bonds posted $15.2 billion in inflows — putting 2025 on track for the second-biggest year ever — while high-yield bonds gained $2.5 billion.

Equity inflows this year have reached $576 billion, the third-largest on record.

Strategists led by Michael Hartnett note that the 88 central bank rate cuts since the start of the year mark the “fastest cutting cycle since 2020,” with markets expecting the Federal Reserve to join.

He said policy debates over Fed independence, inflation targets, and possible gold revaluation point to “disruption = debasement,” a theme supporting a bearish U.S. dollar outlook.

A weaker dollar, in turn, could boost gold, crypto, and emerging markets through the latter half of the decade.

On the equities front, Hartnett pointed to the record price-to-book ratio of 5.3x in theS&P 500, driven by the “Anything but Bonds” allocation trend and the AI boom.

He cited foreign exchange (FX) debasement, demographic shifts favoring equities over real estate, and global consumption rebalancing as potential “it’s different this time” factors.

If that proves wrong, bonds could regain favor, and international stocks may continue to outperform the S&P 500.

In the energy market, Hartnett said oil and natural gas prices, down 41% since March, have already priced in a Russia-Ukraine peace scenario.

He added that Trump’s geopolitical stance favors lower U.S. energy costs, and potential U.S.-Russia cooperation in developing Arctic shipping routes and untapped reserves could deepen the bear market in energy prices.

“Trump’s geopolitics aims for lower energy prices for [the] U.S. consumer,” Hartnett said.

By region, U.S. equities saw inflows of $21.2 billion in the past week, reversing outflows from the prior week.

European equities added $700 million, while Japan recorded $700 million in outflows. Emerging market equity outflows resumed, totaling $2.1 billion.

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