This morning I joined Bloomberg Surveillance with Lisa Abramowicz to walk through how I’m framing 2026 and why I think markets are underestimating how rate-driven this next phase really is. My core message was simple: 2026 is not a boom and it’s not a bust. It’s a real-yield year and a two-half market. Growth slows but doesn’t break, the Fed delivers insurance easing of roughly 50–75bps, real yields drift lower, and that allows stocks and bonds to work together again. That window supports equity exposure and duration as insurance. The second half is where the risk builds. AI doesn’t vanish inflation, which stays sticky above target near 3%.

I was clear that markets trade discount rates, not earnings narratives, and that equities can fall even with solid profits if real yields or term premium reprice quickly.

I also laid out a clean guardrail: if the 10-year moves toward 5% and credit spreads widen, the equity runway ends. Short of that, the path of least resistance remains higher, driven by lower real discount rates rather than speculative excess.

On positioning: I like duration as insurance, not as a hero trade. Equity leadership stays narrow around AI infrastructure, power, semis, and capex-driven industrials. AI is real investment, demand first and supply later, but it doesn’t recreate the disinflationary 1990s backdrop. And hedging matters again, but it depends on the shock: duration for growth scares, TIPS for inflation risk, and energy and gold for fiscal or geopolitical stress.

Bottom line: 2026 is about real yields moving toward neutral. As long as rates don’t re-accelerate, risk assets move higher. If real rates instead move higher, the rules change fast. StoneX Group Inc.