These two market gauges may signal a big risk-off event for the market, says BofA

Bank of America is flagging a combination of two market signals that, taken together, may point to elevated risk of a broader risk-off move. The first is rising anxiety in the bond market, where shifting yields and volatility often reflect changing expectations for interest rates, inflation, or credit conditions. The second is weakness in financial stocks, a sector whose performance is closely tied to lending conditions, credit quality, and overall confidence in the financial system.

The significance lies in the pairing. Bond-market stress alone can reflect routine repositioning, and financials can lag for sector-specific reasons. When both deteriorate at once, however, it can suggest investors are repricing broader economic or credit risk rather than reacting to isolated news. Because banks sit at the center of credit intermediation, sustained weakness there can feed back into tighter lending and softer growth expectations.

What to watch: whether the bond-market anxiety persists or fades, whether financial stocks stabilize or extend losses, and whether other risk-sensitive assets—credit spreads, cyclical equities, and volatility measures—confirm the same message. A single day's move is rarely decisive; the durability of these signals matters more.