A new report from Bank of America warns of the growing risk of a global stock market bubble, as interest rates fall and financial regulations ease.
The report, led by strategist Michael Hartnett, highlights a drop in the average global interest rate to 4.4% from 4.8% last year, with projections it will fall further to 3.9% in the next 12 months. Central banks in the U.S., U.K., Europe, and China have all moved to cut rates.
The report also notes potential regulatory changes in the U.S. aimed at increasing retail investor participation, which could further fuel market volatility and bubble risk, according to financial analysis.
Hartnett, who previously predicted the outperformance of global stocks over U.S. stocks and warned of market fragility in late 2024, cautioned again in June 2025 that markets could overheat as a result of easing monetary policy.
Despite some volatility — including sharp drops following tariff announcements by Donald Trump — the S&P 500 has hit record highs, though it continues to underperform global indices.
