From market volatility to bond opportunities what's next for investors in 2026? Joyce Huang, Senior Client Portfolio Manager at American Century Investments, joined Bloomberg TV and radio to share her outlook on Fed policy, equity risks, and why bond yields may still offer attractive income.

Bloomberg analysts reviewed the outlook for financial markets in 2026, noting that the US economy has remained resilient despite earlier recession concerns. They expect the first half of the year to be slower, particularly for lower-income consumers and the electric vehicle market, due to the expiration of some tax incentives and high vehicle prices.

The panel anticipates that new tax incentives and the appointment of a new Federal Reserve chair in the second half of 2026 will provide more clarity and potentially stimulate growth. While high-yield investments offered strong returns in the previous year, experts urge caution due to tight credit spreads and recommend considering undervalued options. Only one interest rate cut is expected from the Fed, barring a significant rise in unemployment.

Where markets go next in 2026

I wanna ask you about Tesla specifically or the lost EV incentive, but we did hear and we are expecting many more tax incentives and one big beautiful bill for the beginning of next year. And you think that's gonna keep us from much slower growth. Yes, absolutely. I mean, anecdotally, I owned a Tesla Model Y and fortunately it got in an accident and we had to get rid of it, but I replaced it with a combustion vehicle. Oh, really? Yep. That's it. Ed, by the way, I know drives a Tesla Model Y as well. He's a big fan because it's autonomous, it drives him back and forth. I know, he's a little trouble with the Golden Gate Bridge. Yeah. What's the outlook here for 2026 year? Because we had fixed income. You guys had a great year in 2025. Finally. High single digit return share. What are you looking forward for this year? So as Matt was saying, this time last year, we were actually much more negative. We were actually thinking there was a very high chance there was going to be a recession in the US. Clearly, the data so far has shown that that is not the case. We don't have Q4 numbers yet. Obviously, we had the government shutdown in the very beginning of that, but all signs are pointing to a reaccelerating or stable US economy. That being said, we do think that the first six months of 2026 could be a little bit slower. We'll see how the holiday shopping season kind of pans out, but we're seeing this K-shaped economy where high-end consumers, the top 10%, represents 50% of consumer spending. So that bottom 90% of consumers likely to pull back, especially in the EV market. They're not getting these tax incentives. The top 10% was never qualifying for them. So in the second half- I don't think they're buying any new cars, by the way, the bottom 50%, right? New cars are too expensive. I think the average car price is now over 30,000. Over 50, over 50. Oh my gosh. Yeah, it's crazy. Listen, we have a K-shaped market as well. I keep waiting for this broadening out. And when I came in this morning, I typed most U4 into my Bloomberg terminal. That shows you the pre-market movers. And the winners today are the winners of last year, right? Vertiv, Micron, Western Digital, Palantir, Tesla. It's just the same kind of like high bandwidth DRAM memory makers that are gaining ground again. When do we see this broadening out? So that's what we're thinking. So I think this first half of the year is a great opportunity to start thinking about the opportunities to broaden out because we expect that through this volatility in the market, there's going to be opportunities, both in credit and equities. There's going to be opportunities to buy because the second half of the year, we're actually more optimistic due to the fact that there will be these tax incentives flowing through. We will have a new Fed chair in place. Some of the uncertainty around monetary policy will be settled with the new Fed chair. So I think towards the second half of the year, you're going to get more clarity or you're getting a little bit of a more re-acceleration. So I would say now is the time to really look at options that are undervalued, that have underperformed a bit that might come back. How much credit risk do I want to take in 26? High yield really paid last year. It did. And we do like select high yield names, but you have to be cautious, right? Spreads are historically extremely tight. So absolute yields look great. So you're in seven, 8% in high yield. But in terms of credit spread, you're not really getting compensated much for taking additional credit risk. So you have to be cautious. We're active investors. So we are thrilled in this market because we're looking for these really special opportunities to find. We're not just buying beta. I wouldn't do that. But investment grades also offering pretty attractive yields and you're getting 5%, 6% there for A-rated bonds. What do you think about the Fed, Joyce? I mean, do they continue to cut as the 10-year continues to rise? Because we've seen that divergence. And, well, we only have 30 seconds left. So just that. We do think that the steepening of the yield curve has been, again, very positive for fixed income investors. We believe that the Fed is likely to only have one cut this year, despite a new Fed chair coming in. The data, again, economy's resilient. Unless unemployment spikes considerably, one cut is really our call.

Whenever, wherever, however - that's the Venezuelan President's offer to sell more oil to the U.S., as he pleads for diplomacy, not conflict. It comes after Washington hit five more alleged drug boats with airstrikes and reportedly struck Venezuelan soil for the first time. Meanwhile, the U.S. Coast Guard is in hot pursuit of an oil tanker which is suddenly claiming to be Russian.

Caracas

Maduro open to talks with Trump over fight against drug trafficking

U.S. President Donald Trump threatened on Friday (January 2) to come to the aid of protesters in Iran if security forces fire on them, days into unrest that has left several dead and posed the biggest internal threat to Iranian authorities in years.

Washington

Trump threatens Iran over protest deaths as unrest flares

Israel says more than 30 aid groups have failed to comply with new rules to register their workers and will have access to Gaza suspended. The banned organizations say the rules will have horrific consequences during deadly floods as it tries to rebuild just months into a fragile ceasefire.

Jerusalem

Middle East Conflict

Israel’s ban on dozens of aid groups from Gaza begins

A U.S. intelligence assessment has determined that Ukraine is not responsible for what Russia claims was a drone strike targeting Vladimir Putin’s residence. Both Putin and Ukrainian President Volodymyr Zelenskyy gave year-end news conferences amid continuing discussions about a peace deal held up by key unsettled issues.

Moscow

CIA rejects Russia’s claim Ukraine tried to hit Putin’s residence

Zohran Mamdani was officially inaugurated as the mayor of New York City, becoming the first Muslim and first immigrant in half a century to hold the position. The public ceremony at City Hall featured Senator Bernie Sanders administering the oath of office, followed by a community celebration on Broadway.

New York

Mayor Zohran Mamdani inaugurated at New York’s City Hall

Taiwan’s president has struck a defiant tone after China launched fresh military drills near the island. In a New Year’s Day speech, Lai Ching-te said 2026 would be a critical year and vowed to defend Taiwan’s sovereignty.

Taipei City

Taiwan president signals tougher stance on Beijing

For several years, the French government has explored ways to limit teenagers’ access to social media due to its harmful impact on mental health, and new guidance from the European Commission could now make it easier for France to pass legislation on the matter.

Paris

France proposes social media ban, following Australian model

Israel will enforce a ban on 37 international NGOs in the Gaza Strip, citing failure to meet security and transparency standards.

Israel says it 'will enforce' ban on 37 NGOs in Gaza

Zohran Mamdani became mayor of New York City just after midnight on Thursday, marking a historic moment with a low-key swearing-in ceremony held deep beneath Manhattan. The Democrat, who at 34 is the city’s youngest mayor in generations, takes office as one of the most closely watched political figures in the U.S.

Mamdani becomes New York City mayor

Dozens of people have been killed and 100 injured, most of them seriously, after a fire tore through a crowded bar during a New Year's Eve party in the upscale ski resort of Crans-Montana, Swiss officials said.

Crans-Montana

Dozens killed, 100 injured in fire in Swiss ski resort bar

President Donald Trump said his administration was removing the National Guard from Chicago, Los Angeles and Portland, but he added in his social media post that federal forces will "come back" if crime rates go up.

Chicago

Trump: National Guard being removed from Chicago, LA and Portland

Finnish police have seized a cargo ship suspected of sabotaging an undersea telecom cable between Helsinki and Estonia on December 31. Authorities say the vessel was sailing from Russia to Israel when it was intercepted in the Gulf of Finland.

Helsinki

Finland seizes Russia-linked ship over suspected cable sabotage

Russia's defense ministry released video footage on Wednesday (December 31) of what it said was a downed drone at a briefing intended to show Ukraine tried this week to attack a presidential residence and challenge Kyiv's denials that such an attack took place.

Russia releases video footage to challenge Kyiv over alleged attack

Severe humanitarian needs in Gaza are worsening as dozens of aid groups are forced to halt operations under new Israeli restrictions.
Up to 48 organizations have stopped work, leaving fewer clinics, food distributions and shelters for civilians.

Israel to block dozens of aid groups working in war-battered Gaza

The world has begun saying goodbye to 2025, with South Pacific nations first to welcome 2026.

Council of the City of Sydney

Fireworks light up the globe as nations ring in 2026

CNN, citing sources, reported that the CIA had carried out a drone strike earlier this month on a port facility on the coast of Venezuela. U.S. President Donald Trump said the U.S. struck a facility where boats accused of carrying drugs "load up."

Trump says U.S. strike hit dock in Venezuela

President Trump says the U.S. "knocked out" a "big facility" last week linked to alleged drug boat operations. Unlike previous operations at sea, this strike occurred on Venezuelan territory, though the president did not disclose specific details about the timing, location, or the party responsible for the attack.

Trump says U.S. launched strike on boat dock inside Venezuela

Tatiana Schlossberg, the granddaughter of President John F. Kennedy and an environmental journalist, has died at the age of 35 following a battle with cancer, the JFK Library Foundation announced Tuesday.

Tatiana Schlossberg, JFK's granddaughter, dies at 35

The United Arab Emirates says it's withdrawing its remaining forces from Yemen. The move comes after Saudi Arabia bombed a port in Yemen, saying it targeted an arms shipment intended for a UAE-backed separatist force.

Al Mukalla

Saudi Arabia bombs port in Yemen

In an overnight strike, the Saudi military hit a Yemeni port saying they were neutralising a weapons shipments arriving from UAE. The UAE has denied the shipment contained weapons and claimed the vehicles were not intended for any groups. Both countries have supported the fighting sides in the over-decade long war in Yemen, but this strike has turned this rivalry into an open dispute.

The UAE denies shipping weapons to Yemen after overnight Saudi strike

The Kremlin said Tuesday it would toughen its negotiating position in talks on ending the war in Ukraine after accusing Kyiv of attacking a Russian presidential residence — an allegation that Kyiv said was baseless and intended to prolong the conflict.

Russia will toughen negotiating stance on war in Ukraine

China fired rockets into waters off northern and southern Taiwan on Tuesday (December 30) and deployed new amphibious assault ships alongside bomber aircraft and destroyers on the second day of its most extensive war games.

China fires rockets towards Taiwan in war games simulating blockade

President Donald Trump on Monday confirmed an alleged drug-related site was targeted during a recent strike, saying, "they load the boats up with drugs, so we hit all the boats and now we hit the area." Trump did not say when the strike happened or exactly where.

U.S. strike hits Venezuelan port facility

The search for Malaysia Airlines flight 370 that went missing in 2014 with 239 people on board is expected to resume Tuesday (December 30). The Malaysian government and a private marine robotics company say they will use advances in technology to aid in the search.

Kuala Lumpur

Search resumes for Malaysia Airlines flight that disappeared in 2014

The two countries have agreed to hold fire, freeze troop movements and allow civilians to return home under a new agreement.

Krong Poi Pet

Thailand-Cambodia ceasefire holds as 72-hour observation period ends

Head of Yemen's presidential council, which is supported by Saudi Arabia, says UAE-backed forces in the country should leave within 24 hours.

Yemen’s presidential council cancels UAE defence deal

U.S. President Donald Trump said the United States could support another major strike on Iran were it to resume rebuilding its ballistic missile or nuclear weapons programs and warned Hamas of severe consequences if it does not disarm.

Florida

Trump warns Iran of possible strike, urges Hamas to disarm

U.S. hit an area in Venezuela where boats are loaded with drugs, Trump says, as Pentagon carries out another deadly strike in the Pacific. This claim follows a series of U.S. strikes on boats in the Eastern Pacific, raising the total number of known strikes to 31 and resulting in over 100 deaths.

Trump claims attack on a dock in Venezuela, strikes kill two in Pacific

The Taiwanese government says it has placed its forces on alert as China intensifies its military presence in the Indo-Pacific Ocean and launches air, navy and rocket drills around the island.

Taiwan's forces on alert as China launches military drills

Ukrainian President Volodymyr Zelenskyy is denying Russian Foreign Minister Sergei Lavrov’s claim that Ukraine tried to attack President Vladimir Putin's residence in northern Russia.

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