Bloomberg Surveillance TV: September 30th, 2026

SPEAKER_1 (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 Abramowitz 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 a.m. 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 hour with stocks inching higher, bonds stabilizing with yields sitting near multi-decade highs. Matt Miskin of John Hancock writing, we are in a high yield bond world and no one wants anything to do with it. Matt joins us now for more. Matt, welcome. Let's just start with the long end. The long end, we got some disappointing data and still people didn't want to buy on 30s. What gives?

Matthew Miskin (0:57)

Yeah, yesterday was tough, John. Consumer confidence weaker, jolts missed and yet yields higher and oil prices were lower. So what we're seeing now more broadly is just a still love for risk assets. Equity is just doing amazing this year and every stock on the planet is loved. Every bond on the planet is disliked. So it's a sentiment issue. We got to get through the PC report today. We're getting some revisions, so that's good news.

But underlying, I think we're waiting to see this before bond investors step back into this market.

Jonathan Ferro (1:29)

Let's just bring up the yield curve, Matt, and look at 2s, 10s and 30s, and we can sit on the front end. We've done this repeatedly over the last month or so.

2s have got a really comfortable spread right now between where the 2-year is and where the Fed policy rate is. Just think about the risk reward here, how compelling things might be just to sit at the front end of the curve. Where's the hawkish surprise going to come from given what's already priced?

Matthew Miskin (1:51)

Yeah, so I mean, we backed off the October hike as of this morning, so that's nice, but December is still looking like a hike. And so right now, I think we've gone from about three hikes priced in to two. That's a nice little reduction for the markets, but I think it is a lot built in. And look, right now, you're getting about a 6% yield in the intermediate part of the curve. That's really attractive. We're at 20-year high yields and no one wants them. So there's a ton of value in the bond market. Right now, the equities have the momentum going for them. They don't have valuation going for them. We're off probably peak growth. We're probably decelerating in growth here. And I think that's what the bond market is missing. I think that's a story for 2027 This looks a lot like 2018 to us, where you had fiscal policy come in, help the economy juice it into kind of the back half. We've got a new Fed chair trying to communicate.

It's missing some of the time, and nonetheless, bond investors have better yield they've had in 20 years. Try to keep it simple. If you can lock in these yields, I think that's going to be pretty attractive.

Jonathan Ferro (2:55)

Don't knock him out. The communication improved just a quarter, grew a little bit older. Let's give him that. Matt, let's talk about the argument in the equity market at the moment.

At the moment, I hear a lot of people come on this program talking about rotating within equities, going back to the hardware trade, the tech trade. Are you making the argument to rotate out of equities to take advantage of these bond moves?

Matthew Miskin (3:15)

So we're using quality value. And John, look, we've still got tech. That's one thing we have had over the years. It's just great quality businesses.

The earnings growth is massive, but we keep trying to find what is the best thing around that. And that's really where we spend our time looking for.

Health care has been great for us. This sector, we've been adding to that. Industrials, though, took a breather. It was tough because the AI trade didn't really show much breath. It was like semis and then everything else just got left behind. I think part of that is that interest rate story. We're going to look back on this quarter as the rate shock quarter. Utilities got crushed. We're picking through some of that stuff and saying, look, if rates do back up to a certain point here and level out, where are things that have added or have some more value? We think defensive value actually cheapened up a bit this quarter, but quality value is better mantra. We've been doing pretty well here. Over the course of the quarter, other than that, we're just trying to find other things than tech. To your point, we've got Micron after the close here in terms of earnings. Wouldn't be surprised if it's another great quarter. We're watching South Korea exports of semiconductors. I mean, it was off the charts the last couple of weeks, in terms of at least the first couple of weeks of September.