Bloomberg Surveillance June Back in Play for First 2026 Fed Cut After CPI
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Feb 13, 2026 Robert Teeter, Chief Investment Strategist at Silvercrest, on sector rotation and shifting valuation opportunities. Jim Caron, CIO at Morgan Stanley IM, on market dispersion, Fed cut odds and yield outlooks. They discuss CPI drivers, rotation from mega-cap winners to AI users, and why fixed income looks more attractive. Short, punchy market themes and positioning take center stage.
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Market Dispersion Limits Broad Contagion
- Markets show heavy dispersion with volatility concentrated in equities while fixed income remains more stable.
- Jim Caron says fire breaks exist between public and private markets, limiting contagion risk.
Goods Inflation Has Returned
- Goods inflation has re-emerged after decades of relative stability since China's WTO entry.
- Jim Caron expects inflation to stabilize around 2.5–3% absent a recession, not near 4%.
Position For Limited Fed Cuts
- Expect only a small number of Fed cuts this year and position portfolios accordingly.
- Jim Caron recommends not assuming a prolonged low 10-year yield unless the curve materially flattens.