The bond market isn't signaling a need for lower interest rates, says Ed Yardeni

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S&P500 연말 목표 7,700(약 10% 상승 여지)을 유지하지만 가는 길은 험난하다고 봄. 연준 인하 기대와 정책 불확실성, 대법원 관세 판결, 채권시장(10년물 4.2%) 반발 가능성을 리스크로 제시. 실적 주도 장세이며 실질 GDP와 기업이익이 사상 최고 수준이라 증시 상승 근거로 봄. 상반기 연준 인하는 없다고 보며, 인하가 과도하면 유동성이 주식시장으로 쏠리는 멜트업 우려를 언급.

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01. Joining us right now is Ed Yardeni. He is the president of Yardeni Research. And Ed, you're telling people that you still think markets will the S&P will be closer to 7,700 by the end of the year. That's your target. That's up about 10% from here. But you do think it's going to be a rocky path. Why don't we talk about that?

02. Well, it's it's a rocky path today already with what we're seeing the administration do with regards to J. Pal. Uh clearly the market doesn't like it. gold is at an all-time record high. So, I I did think we were going to have some turbulence related to uh the Fed, but I I thought it was going to be when Trump actually picked his new Fed chair, I didn't expect that he'd actually go through with trying to investigate Powell.

03. The the other issue for me is the Supreme Court uh maybe even on Wednesday could rule that Trump's tariffs are unconstitutional and the question is then what and that could create some uncertainty. There's certainly going to be lots of companies that are going to be demanding that they get refunded on the tariffs that they paid.

04. Uh and then of course there's my friends the bond vigilantes. Uh the bond yield last delic was up to 4.2%. So the bond market could start to really show some discontent here. I thought it was going to be because the economy was going to be too strong on excessive monetary and fiscal stimulus and that that would push bond yields up and that would create some uncertainty for the stock market.

05. But it looks like this issue with the Fed could already cause the bond vigilantes to act up. That's a pretty long laundry list of reasons that the market shouldn't go up. You didn't even touch on the geopolitical issues that are out there. What makes you think that what makes you think that the markets will rise in spite of all of that?

06. Well, earnings, this has been very much an earningsled market. And uh the reason earnings have been so strong and resilient is because the economy has been so strong and resilient. I mean, Becky, you think of of all the things all the shocks that have hit this economy since the beginning of this decade, which I still call the roaring 2020s.

07. Uh, and for example, we had the pandemic and then the pandemic uh led to to lockdowns. The lockdowns were lifted that led to a surge in demand for goods. That led to supply disruptions that led to inflation. The Fed tightened and then we had tariffs last year. And here we are at an all-time record high for real GDP and S&P 500 earnings.

08. And by the way, the fourth quarter earning season, reporting season, which we're in now, is likely to be another very strong one with record uh with a record level of uh profits. All right, let's go back to some of the macro issues that are out there. Um you raised these issues of the Fed. Obviously, that's front and center for the markets this morning.

09. You're anticipating that there will be no Fed cuts in the first half of the year. if there is another Fed cut. You say you're worried about a melt up. You want to explain that? Well, yeah. I I I I don't think there's really that much uh cause for the Fed to move and lower rates. Uh as a matter of fact, I've been on the wrong side of this issue for a while, but the the Fed just won't listen to me.

10. I my position back in 2024 when they lowered rates by 100 basis points is that the bond vigilantes wouldn't agree with that. And sure enough, bond yields went up 100 basis points. And here we've barely had a drop in the bond deal with the Fed cutting last year by 75 basis points. Uh so I don't really think that the bond market is signaling that there's a need uh for these low lower interest rates.

11. And so if the Fed just continues to lower rates to a large extent because of pressure from the administration uh that could create a meltup because a lot of that easing of a lot of that liquidity isn't really going to go into the economy which from a real GDP perspective is booming. uh but it's going to go into the stock market.

12. We're showing the big banks right now, all of them are lower, some of them substantially after the president said that he he's thinking of trying to get them to put a 10% cap on what they can put on credit card interest rates. What do you think of that? Because you've also said that you think banks will lead the way with with these earnings.

13. Yeah. Well, I I I I did uh when I wrote my piece for for today, I didn't anticipate that the president was going to come after Pal this way. And so I think this clearly is a reaction to uh not just PAL, but also this idea of capping interest rates on credit cards. I I think that's going to require some legislation which has to be passed by Congress and I don't think that's going to happen.

14. Um, also the banks have tremendously powerful lobbyists. I think that's they're going to keep that from happening as well. Look, this administration puts out a lot of trial balloons and see which ones uh make make it up into into into this the stratosphere. And uh I I don't think this one's gonna is gonna