Bank of America thinks a “risk asset melt-up” will fuel the bull market in the first quarter of 2020, thanks to breakthroughs on two geopolitical fronts: the trade war between the U.S. and China and the expected arrival of Brexit.

These two factors, along with the Federal Reserve and European Central Bank’s efforts to add more funds to the pool, have Bank of America analysts like Michael Hartnett optimistic for the start of a new decade in 2020.

“We continue to expect returns to be front-loaded in 2020,” Hartnett and other analysts wrote in a Dec. 12 note to clients.

How front-loaded are we talking? The strategists project the S&P 500 hitting 3,333 points by March 3. That would be a 4.2% increase from Monday’s close of 3,191 points.

bank of america melt up bull market

The bond market would feel the love as well. Bank of America analysts see the 10-year Treasury yield hitting 2.2% by Feb. 2, which would be a 34-basis-point bounce from Monday morning’s yield of 1.86%.

Friday was a big day around the world and global markets rose accordingly. The U.S and China finally hammered out a phase one trade deal after months of back-and-forth talks that sent markets on a roller coaster. The Conservative party also secured a clear majority of seats in the U.K. Parliament, which cleared a path for Prime Minister Boris Johnson to execute his Brexit plans and move the country out of the EU.

But some strategists warn these are only preliminary victories, and these geopolitical issues will resurface again in the future.

“Some of these geopolitical risks seem like they are somewhat resolved, but they’re only on hiatus,” Principal Global Investors Chief Strategist Seema Shah said, according to Bloomberg.

Shah thinks a short term rally is most likely, but she said investors should consider defensive stances in the future.

And that may be why BNY Mellon’s Daniel Tenengauzer says many investors are “agnostic” at the moment, according to his own client’s feedback.

“Following conference calls with investors in Asia, EMEA and the Americas as well as meeting with investors in the U.S. and Canada, we conclude that investors are uninterested in adopting a strong bias in any direction,” Tenengauzer said.

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