Why Ed Yardeni is expecting an interest rate hike in July

Watch on YouTube ↗  |  May 19, 2026 at 01:45  |  5:41  |  CNBC
Speakers
Ed Yardeni — President, Yardeni Research

Summary

Ed Yardeni discusses his forecast of a Fed rate hike in July, his bullish S&P 500 target of 8250, and a healthy market broadening into software. He also comments on geopolitical tensions and oil prices, but expects the market to absorb higher yields without a major downturn.

  • Yardeni expects the Fed to raise rates by 25bps in July.
  • He maintains an S&P 500 year-end target of 8250.
  • He sees a rotation from big tech into software as a positive broadening sign.
  • Bond yields are likely to rise further, with 10-year potentially hitting 4.75%.
  • Oil prices at $100 are seen as reasonable given geopolitical risks.
  • Yardeni believes the stock market can handle higher rates without a severe pullback.
  • Earnings growth is broadening beyond the Magnificent Seven and semiconductors.
  • The market's focus on AI remains a key support for valuations.
Trade Ideas
Ed Yardeni President, Yardeni Research 0:29
S&P 500 target 8250 by year-end.
Yardeni expects the S&P 500 to reach 8250 by year-end, driven by resilient earnings, broadening earnings growth, and the market's ability to absorb higher rates without a major pullback. He believes the stock market can handle a rate hike and that the current rally is supported by fundamentals, not just narrow tech leadership.
SPY HIGH
Ed Yardeni President, Yardeni Research 1:15
Bond yields to rise with July rate hike.
Yardeni expects the Fed to raise rates by 25 basis points in July, driven by the bond market signaling that the Fed is behind the curve on inflation. He believes the 2-year yield (currently 4.1%) is a good leading indicator, and if the 10-year yield breaks above 4.6%, the next stop is around 4.75%. This view implies a further rise in bond yields, which is manageable for the economy but warrants monitoring.
2-Year Treasury Yield 10-Year Treasury Yield MED
Ed Yardeni President, Yardeni Research 4:27
Rotation into software supports market broadening.
Yardeni sees a healthy rotation of capital from high-flying tech stocks into the software sector as a sign of market broadening. He believes this shift is positive for the overall market because it indicates that earnings growth is becoming more widespread beyond the Magnificent Seven and semiconductors, supporting a more sustainable rally.
IGV MED
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This CNBC video, published May 19, 2026, features Ed Yardeni discussing SPY, 2-Year Treasury Yield, 10-Year Treasury Yield, IGV. 3 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Ed Yardeni  · Tickers: SPY, 2-Year Treasury Yield, 10-Year Treasury Yield, IGV