Bloomberg Surveillance Markets React to Last Major US Eco Data of 2025
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Dec 23, 2025 Jim Caron, Chief Investment Officer at Morgan Stanley, discusses the potential for a U-shaped recovery in 2026, emphasizing the importance of bonds in the current market. He predicts modest rate cuts and a positive trajectory for cyclical stocks. Randy Schwimmer, Vice Chair at Churchill Asset Management, highlights strong demand in private credit and how it thrives even in a lower rate environment. He also explains effective risk management in the private lending space, underscoring the importance of aligned interests between sponsors and lenders.
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Bonds Offer Central Value For 2026
- Bond returns look attractive because cash on the sidelines will flow into fixed income yielding 5–6%.
- Stephen Major argues bonds should occupy a central place in portfolios heading into 2026.
Steepening Was A Bull Steepener
- The recent yield curve steepening is a bull steepener driven by front-end declines, not long-end rises.
- That means Fed cuts beat forwards rather than longer-term yields rising, altering typical steepening narratives.
Don't Take Profits Too Early
- Avoid taking profits too early in a broad 2025 rally; diversification matters when consensus is obvious.
- Consider holding government bond exposure for expected 5% total returns in 2026 rather than chasing higher risk.