Bloomberg Surveillance TV: September 2nd, 2026

**Lisa Abramowicz** (0:02)
Bloomberg Audio Studios. Podcasts, radio, news.

**Jonathan Ferro** (0:11)
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro, along with Lisa Abramowicz and Annmarie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics. From our global headquarters in New York City, we are live on Bloomberg Television weekday mornings from 6 to 9 AM Eastern.
Subscribe to the podcast on Apple, Spotify, or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app. We begin this out with stocks looking to snap a three-day losing streak. Kate Moore of Citi Wealth writing, we hold an underweight duration since we believe the likely path for interest rates across advanced economies, central banks runs higher. We prefer to take risk in equities. Kate, join us now for more. Kate, good morning.

**Kate Moore** (0:51)
Good morning.

**Jonathan Ferro** (0:52)
How was the hiking? What did I miss?

**Kate Moore** (0:54)
The hiking is always amazing.

**Jonathan Ferro** (0:56)
Good time had by all.

**Kate Moore** (0:57)
Yeah, it was a good time had by all, including the bears, which I know, Jonathan, you care about.

**Jonathan Ferro** (1:00)
And I'm very, very scared of the bears and won't be attending anytime soon for those hikes.

**Lisa Abramowicz** (1:04)
Yeah, a grizzly actually walked toward us on our hike.

**Jonathan Ferro** (1:06)
Oh, you saw one.

**Kate Moore** (1:07)
You should be more concerned about the moose than the bears, but that's another story.

**Jonathan Ferro** (1:10)
It's like the hippo, right? The hippo. People seem to think hippos are like, you know...

**Lisa Abramowicz** (1:14)
Dumb, blind and mean.

**Jonathan Ferro** (1:15)
Right? We're conditioned as children to think that hippos are cute. And they're not cute.

**Lisa Abramowicz** (1:19)
And the little ones are sure cute.

**Jonathan Ferro** (1:20)
And moose aren't either.

**Lisa Abramowicz** (1:21)
Yeah, and neither are bears.

**Jonathan Ferro** (1:23)
They're adorable. My producer always tells me, we're live.

**Kate Moore** (1:25)
Anyway, I'm not a bear.

**Jonathan Ferro** (1:26)
We're live. Okay, not a bear.

**Kate Moore** (1:27)
There we go.

**Jonathan Ferro** (1:28)
But you're bullish stocks.

**Kate Moore** (1:29)
So let's talk about it. I am still bullish stocks. Though I think we have to expect a bit of consolidation in September. That is the normal course of business at this time of year. There's a multitude of reasons and then people make up reasons, of course. But we're in this kind of holding period before we get to third quarter earnings. We know that. We obviously, and you guys were just talking about this, have a critically important Fed meeting and a few very important data points that people are going to want to digest and then very, very importantly, this is a time where companies are talking to lots of investors. There's an enormous number of conferences over the next two to three weeks, and people are just not going to be taking a lot of risk ahead of hearing from those management teams. So there is that kind of like pause that is very natural at this time of year. That wouldn't stop us from being overweight and constructive into year end. I just want to make that point.

**Jonathan Ferro** (2:15)
Got it. Underweight bonds, though.
And the big question, you know what the big question is right now. It's whether that bond story becomes a problem for equities. It hasn't so far. Will it change?

**Kate Moore** (2:24)
Yeah. I don't think it's going to. Look, we've been underweight bonds for a good period of time, for the duration of my time as CIO at Citi, and we have continued to say, like in all of our investment committee meetings, are we now at a point where we want to add duration back into the portfolio, where we want to get to a more neutral position, and we just can't make the case, frankly. In fact, we think the economic data remains very strong, that we're in a sustainable expansion.
But combined with that, the fiscal deficit story is no joke. And I think investors are not wholly focused on it, but they're also aware of it. And our expectation is that even if the Fed starts the path of policy tightening, that we're going to stay at a rate of inflation that is above Fed target for a while. It's going to take time for that, any interest rate moves, the blunt tool, to really work its way through the system.

**Lisa Abramowicz** (3:09)
Just to sort of build on that, people had expected the long end of the yield curve to come in if the Fed was hawkish. And if we heard from Fed Chair, Kevin Warsh, that he was prepared to hike rates, he delivered, but the bond market didn't respond the way people thought. Why?