Fed Hikes Not Over: Economy ‘Can’t Deal’ With What Comes Next | Komal Sri-Kumar

Summary

Komal Sri-Kumar reacts to the Fed's first rate hike in three years, arguing the 25 bp move was too small and that the Fed is not done. He expects another hike in December and further tightening in 2027, citing elevated inflation, oil-supply risks, tariffs, and fiscal deficits. He sees long-term Treasury yields staying high and pressuring housing, consumer spending, and stocks, with oil facing upward pressure from the Iran war and a Saudi pipeline closure.

• Fed raised rates by 25 bp; Sri-Kumar says 50 bp was warranted.
• He expects two hikes in calendar 2026, with the second in December, and further tightening in 2027.
• Long-term bond yields are biased higher due deficits, Treasury supply, and weak buybacks.
• Higher yields hurt housing, auto demand, consumer spending, and stock market resilience.
• Oil faces upward pressure from the Iran war and closing of the East-West pipeline.
• He warns high yields plus AI capex raise financial-accident risk.
• Fiscal consolidation is needed to bring yields down.