The president of sell-side Wall Street firm Yardeni Research, Ed Yardeni, believes that the Federal Reserve will stay the course and hold interest rates at current levels.
In a new CNBC interview, Yardeni says he doesn’t anticipate any monetary policy easing, citing a resilient US economy fueled by robust household spending and strong capital investments from tech companies.
“I was not expecting that there would be a Fed rate cut this year. And I still think that because the US economy is very resilient. The consumer hung in there extremely well over the past three years when the Fed raised interest rates. And now the consumer has held up, I think, quite well with the tariff uncertainty.
And capital spending, for all the concerns that uncertainty would put a hammer to capital spending, the reality is that technology capital spending, which now accounts for over 50% of total capital spending, remains very strong.”
Yardeni also believes that the allure and demand for US Treasuries will remain strong.
“The US is the largest capital market in the world. There’s nothing like it. Sure, we’ve got a lot of debt. But people have been buying that debt because they do want Treasuries.
So no, the worst that can happen in the Treasury market, as we saw in 2023, is yields go up to levels of which people want to buy them. And they got up to 5%, people wanted to buy them. And before you know it, the yield came right back down.”
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