JPMorgan Says Sell Two-Year US Bonds as Traders Wait for CPI

Ruth Carson and Elizabeth Stanton

Fri, February 13, 2026 at 8:47 PM GMT+9 2 min read

(Bloomberg) – JPMorgan Chase & Co. strategists recommended selling two-year US Treasuries as a “tactical” trade, citing a resilient growth outlook that will make it hard for the Federal Reserve to cut interest rates aggressively.

“The underpinnings of the economy are strong and it will be challenging for nominee Kevin Warsh to bend the FOMC to his will once he is confirmed and takes over as chair,” strategists led by Jay Barry wrote in a note, referring to the Federal Open Market Committee.

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Friday’s crucial US inflation report may provide fresh clues on the Fed’s next steps, with any sign of easing price pressures likely to fuel demand for shorter-dated, policy-sensitive government debt. The median forecast predicts a year-over-year increase of 2.5% for the core consumer price index.

Traders are now pricing a quarter-point Fed rate cut in July and another by the end of the year.

Treasuries were steady on Friday ahead of the report, with the two-year yield holding around 3.47%. It’s been a volatile week for the market, with yields falling on Thursday during the stock market selloff, and jumping on Wednesday on the back of a strong jobs report.

“We’re probably siding more with the risk is high that we get some inflation coming through, but of course it’s quite an uncertain backdrop,” said Ella Gude, head of fixed income at BNY Investments Newton, in an interview with Bloomberg TV. This raises the risk of a move that may send the 10-year yield close to 5% “pretty rapidly,” she said.

Some others disagree. Hedge fund manager David Einhorn is betting that a Warsh-led Fed will lower interest rates “substantially more” than markets are currently predicting. The co-founder of Greenlight Capital said he has bought Secured Overnight Financing Rate futures on expectations of a rally if the Fed reduces borrowing costs more aggressively.

JPMorgan expects US core CPI, which strips out food and energy, to have risen a “firm” 0.39% in January, due to early-year price pressures and the fading of lingering effects from the federal government shutdown. Bloomberg Economics’ estimate is for a 0.31% gain, matching consensus.

“We think it will be difficult for front-end yields to decline significantly from current levels,” JPMorgan strategists wrote in the report.

Story continues  

–With assistance from Will Standring.

(Updates market pricing. An earlier version of this story corrected the Treasury move in the fifth paragraph.)

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