Yardeni's Fed Bombshell: Rate Hike Coming In July - State Street SPDR S&P 500 ETF Trust (ARCA:SPY)

Yardeni’s Fed bombshell challenges the market’s rate-cut narrative by suggesting a July rate hike could occur, making him one of the first major economists to forecast a policy tightening this year. The odds of a July move, according to market-based probabilities, sit around 5%, highlighting how isolated his stance remains. Yardeni argues the April FOMC minutes reveal hawkish undercurrents, and he expects Chairman Powell’s leadership to pivot away from easing as early as June, setting the stage for a potential July lift amid resilient growth, a tight labor market, and rising inflation. He also notes energy shocks from the war, with oil near $90 per barrel, complicating the inflation outlook and Fed credibility. While others such as Fed Governor Waller acknowledge the possibility of hikes, Yardeni’s call underscores a split among investors about the trajectory of policy in the face of energy-driven price pressures.