Economy
The Fed will have to raise interest rates in July to appease 'bond vigilantes,' Yardeni says

Published Mon, May 18 2026 10:58 AM EDT
Updated 2 Hours Ago
Jeff Cox
@JeffCoxCNBCcom
@jeff.cox.7528

KEY POINTS
• Not only does the market not believe the Fed will cut, but odds also are rising for a hike, with current pricing implying a 42% chance of an increase by the end of the year.
• "The Fed must catch up to the bond market to avoid losing control of borrowing costs and to appease the Bond Vigilantes," Ed Yardeni, the head of Yardeni Research, wrote Monday.


Kevin Warsh, President Donald Trump's nominee to be next chair of the Federal Reserve, testifies before a Senate Banking Committee confirmation hearing on Capitol Hill in Washington, April 21, 2026.
Kevin Lamarque | Reuters

Sent to the Federal Reserve to lower interest rates, incoming Chair Kevin Warsh instead may have to push for higher levels to establish credibility, market veteran Ed Yardeni said.

If the new central bank leader fails to signal that policymakers are attuned to inflation pressures, it could risk further market wrath in the form of escalating Treasury yields, added Yardeni, the originator of the term "bond vigilantes" to describe such incidents of investor unrest.

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