Warsh Is a Hawk in Dove's Clothing, Yardeni Says
Speakers
Ed Yardeni
— President, Yardeni Research
Summary
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.
Ideas
Resilient economy keeps equities roaring.
The US economy has demonstrated resilience and the 'roaring twenties' equity bull market will continue even if the Federal Reserve raises interest rates, because bond yields have normalized around 4.5% and Fed policy is already normalized, so rate hikes would not spoil the party.
Bond rally possible if Fed hikes.
If the Fed were forced to raise rates, it would be a small 25-50 bps move, and the bond market might actually rally on it because previous rate cuts failed to lower bond yields and a hike could be seen as a final step or a sign of confidence, with yields already normalized.
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This Bloomberg Markets video, published June 18, 2026, features Ed Yardeni discussing SPY, TLT. 2 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Ed Yardeni · Tickers: SPY, TLT