Bank of America Sees Volatility Risk at Jackson HoleBy Ion Jauregui – Analyst at ActivTrades
Bank of America warns that Jackson Hole could bring turbulence, as the Fed may inject up to $2 trillion in liquidity. From August 21 to 23, market attention will be focused on Jackson Hole, where Jerome Powell may provide clues about the future of U.S. monetary policy. According to Bank of America Corp. (NYSE:BAC), if the Federal Reserve adopts too “dovish” a tone, markets could face a classic “buy the rumor, sell the news” reaction following the strong equity rally of recent months.
The bank’s strategists, Mark Cabana and Katie Craig, anticipate that the Fed could restructure its balance sheet and allocate up to 50% of its assets to short-term Treasury bills (T-bills). This would amount to $2 trillion in purchases over the next two years, absorbing much of the Treasury’s issuance: $825 billion in 2026 and $1.07 trillion in 2027. The move would aim to better align the Fed’s assets and liabilities, reduce balance sheet risks, and support Treasury financing in a period of elevated issuance.
Fundamental Analysis (BoA)
Bank of America has shown resilience in a challenging environment. In 2024, it reported net revenues of around $92 billion and net profit exceeding $26 billion, with a return on equity (ROE) of 11%. Its strong CET1 capital ratio and diversified revenue base in consumer banking, investment banking, and digital services strengthen its stability. Looking ahead, analysts expect revenue growth of around 5% annually, a trend that would be further supported if the Fed launches a new liquidity cycle.
Technical Analysis
Bank of America shares closed yesterday at $47.92, up nearly 50% in 2025, recovering levels from late 2024. The key support lies at $44.76, with the price currently holding above the 50-day moving average. Immediate resistance is at $48.54. A breakout above this level would pave the way toward the $49.31 highs, while losing current support could push the stock toward the point of control area near $45.95 and potentially down to $40.00.
The RSI at 57.78% points to consolidation before another move higher, while the MACD shows a modest bullish crossover. Trading volumes have spiked above average in the past week, reflecting heightened volatility. Along with the golden cross of May still in expansion, the long-term trend remains clearly bullish, although a decisive breakout above the $48–$49 resistance zone is needed before new highs can be reached.
Jackson Hole as a Possible Catalyst
Bank of America cautions that Jackson Hole could act as a catalyst for volatility but also as the starting point of a liquidity cycle that would benefit both the financial system and its own stock, supported by solid fundamentals and a favorable technical outlook.
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