Warsh Is a Hawk in Dove's Clothing, Yardeni Says

Ed Yardeni argues that Fed Chair Kevin Warsh's hawkish inflation commitment signals a tightening bias, but the resilient US economy will keep the 'roaring twenties' equity bull market alive. He also sees bond yields as normalized and suggests any rate hike could trigger a bond rally rather than a selloff. - Yardeni labels Fed Chair Warsh a 'hawk in dove's clothing' for emphasizing price stability and committing to 2% inflation. - He believes the Fed has shifted to a tightening bias and will likely not cut rates in 2025, but may keep policy on hold. - Despite possible rate hikes, the US economy's resilience will sustain the equity bull market ('roaring twenties'). - Bond yields have normalized around 4.5%, and a small rate hike could paradoxically cause a bond market rally. - Falling oil and gasoline prices may bring headline inflation down substantially in the near term. - Fed plans to shrink mortgage-backed securities are seen as unhelpful for the housing sector.