CNBC
18 May 2026, 14:58 UTC · 3d ago
Source · https://www.cnbc.com/2026/05/18/the-fed-will-have-to-raise-interest-rates-in-july-to-appease-bond-vigilantes-yardeni-says.html
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Ed Yardeni predicts a likely Federal Reserve interest rate increase of a quarter percentage point in July. — A surprise rate hike contrary to market consensus would typically trigger a sell-off in risk assets and equities.
-0.80Treasury yields have surged, with the 30-year bond recently eclipsing 5%, indicating a lack of investor confidence in a dovish Fed. — Rising long-term yields increase borrowing costs and put downward pressure on valuation multiples for stocks.
-0.60Markets are increasingly pricing in a rate hike by year-end, with current CME FedWatch odds at 42%. — A shift in expectations from rate cuts to hikes generally reduces risk appetite across financial markets.
-0.50Incoming Fed Chair Kevin Warsh has previously stated a belief that the benchmark interest rate could be lowered from its current 3.5% to 3.75% range. — Dovish rhetoric from a Fed Chair typically supports asset prices, though this is currently being offset by bond market volatility.
+0.40The Fed may remove forward guidance language in June that had previously suggested the next move would be a rate cut. — Removing dovish guidance is a subtle tightening signal that reduces the certainty of future stimulus.
-0.30Impact vectors
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The CME Group's FedWatch tool is mentioned as a data source for market expectations, but the company itself is not meaningfully affected.
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