For much of the past 4 months, Bank of America chief strategist Michael Hartnett has been pounding the table on why going long bonds will be the top trade (and biggest "pain trade" for so many who are still short treasuries) of the second half of 2024. For those who missed it, his thesis is simple: with the US economy already sputtering and with fiscal stimulus "as good as it gets" since it will be virtually impossible to pass another massive fiscal stimulus in the years to come, this means that - as Hartnett predicted back in May - "at the margin monetary policy finally gets easier as fiscal gets tighter next 12 months."

Fast forward to today when Jerome Powell stunned markets with a Jackson Hole presentation that was so dovish, it surprised both stocks - which closed essentially at an all time high - and traders, many of whom thought there was no way Powell could possibly outdove what were already incredibly dovish expectations, when the Fed Chair ended the past two years of tightening with a bang and greenlight at least one 25bps rate cut in September (and maybe two, depending on just how catastrophic the August jobs report will be in two weeks).

More importantly, the transition from fiscal stimulus to monetary stimulus means that - as Hartnett expected - yields have collapsed, plunging 80bps since Hartnett started urging his clients to May bonds back in May...