The bond market is currently not concerned about the potential for a new Federal Reserve chair in 2026, according to UBS's Reiman. Instead, the focus remains on the Fed's restrictive policy, which is expected to approach neutral by that time.
The next Fed chair will be influenced by economic conditions and inflation trends. Reiman stressed the importance of monitoring inflation, especially in light of trade dynamics and rising deficits, as this could lead to increased inflationary pressures.
UBS is cautious about extending further along the yield curve due to the possibility of the 10-year yield reaching 4.75% or even 5%. The future direction of monetary policy will depend on the Fed's commitment to achieving its inflation target.