Bank of America Corp. strategist Michael Hartnett warns that failure of the US Treasury's plan to tame long-term bond yields would pressure the dollar and spur short bets against riskier assets ahead of November midterm elections.

If Treasury Secretary Scott Bessent "can't drag 30-year yield below 5%," Hartnett foresees a dollar slump and increased short bets against leverage such as AI hyperscalers and private credit, among other risk assets, in the coming weeks.

Financials also face the prospect of short selling if the plan doesn't work, he said. The interventionist approach by the Treasury chief underscores growing concern over elevated long-term rates and their spillover into equity and credit markets.