HSBC Flags 5 Pain Trades for 2H as Dollar, AI and Treasuries Threaten Shocks
Updated
Updated · CNBC · Jun 30
HSBC Flags 5 Pain Trades for 2H as Dollar, AI and Treasuries Threaten Shocks
2 articles · Updated · CNBC · Jun 30
Summary
HSBC said investors should brace for five second-half “pain trades,” with the biggest surprises potentially coming from a steepening U.S. Treasury curve, renewed AI strength and an “explosive” dollar rally.
June’s more hawkish Fed stance underpins the dollar call, the bank said, warning that any signal of more aggressive action than markets price in could tighten financial conditions and drive a sharper USD ascent.
AI is widely expected to face more bearish narratives, yet HSBC argued the pain trade may be further upside because many leading U.S. AI names already have flat or lower expected full-year 2026 earnings growth versus the year to Q2 2025.
HSBC also said European equities could outperform despite lacking the U.S. market’s AI exposure, while emerging-market yields could fall even as investors are positioned for persistent inflation, limited easing and stronger-dollar pressure.
Oil shocks tied to the Middle East conflict could keep headline and core inflation elevated, reinforcing HSBC’s view that consensus may be too focused on Treasury curve flattening rather than a surprise steepening.