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, together, may point to a broader risk-off shift. The first is rising anxiety in the bond market, where investors typically demand higher compensation for holding longer-dated debt when uncertainty grows. The second is weakness in financial stocks, a sector often viewed as a bellwether because banks sit at the center of credit creation and liquidity.

What makes the pairing notable is that each gauge can move for its own reasons, but when they deteriorate in tandem, it can suggest stress is spreading rather than staying contained. Financial shares tend to reflect confidence in lending conditions and the economic outlook, while bond-market anxiety speaks to concerns about rates, credit, or both.

For observers, the takeaway is not a single data point but the relationship between the two. If bond stress eases while financials stabilize, the warning may fade. If both keep deteriorating, it would reinforce the case that markets are pricing a more defensive posture.