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Title: ZBXCX Stock Market Outlook Fed Signals and Earnings
ZBXCX notes that the bonds market has started 2026 with a “high-yield, high-attention” setup: policy is no longer tightening, inflation is cooler than its peak years, and investors are debating whether the next big move is a gradual easing cycle or a stop-and-go sequence driven by stubborn prices.A quick snapshot helps frame the current pricing:10-year U.S. Treasury yield: about 4.19% (recent reading).2-year U.S. Treasury yield: about 3.54% (recent reading).10s–2s curve: roughly +0.65 percentage points, meaning the curve is positively sloped at the moment.On the inflation side, the latest U.S. CPI report showed headline CPI up 2.7% year over year, with core CPI up 2.6%, and CPI +0.3% month over month in December.For policy, recent reporting and official materials point to the Fed holding the target range at 3.50%–3.75% in the near term, with the next FOMC meeting scheduled for January 27–28, 2026.The Three Drivers That Matter Most in 20261) The “last mile” of inflation (and how it shows up in bond math)The bonds market is less focused on whether inflation is down versus 2022–2023, and more focused on whether inflation is sticky above target or converging toward target without drama. The December CPI print supports a “steady but still elevated” narrative rather than a re-acceleration story.Why that matters: when inflation progress slows, term premium and real-rate expectations can become the bigger swing factors. In practice, that usually means longer maturities can remain volatile even if the policy rate is stable.2) Growth resilience vs. growth fadeBonds pricing is extremely sensitive to whether the economy is merely cooling or actually slipping into a sharper slowdown. The broader global backdrop still looks “resilient but not dynamic,” with major institutions project...
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