The sharp rise in bond yields is making even the biggest market bulls nervous. Ed Yardeni, who started his career on Wall Street in the 1970s, is no exception. The president of Yardeni Research slashed his year-end S & P 500 target to 7,900 from 8,400. The new forecast signals upside of 4.1% from Tuesday’s close of 7,585.73, a far cry from the 11% gain implied by Yardeni’s old estimate. “The risks of a downturn have increased over the next three to six months,” Yardeni said in a note, pointing to higher Treasury yields due to rising energy prices. Indeed, the benchmark 10-year Treasury note yield climbed to a high of 5.041% this week, a level not seen since 2007. Oil prices have also marched higher lately, as the war in the Middle East shows no signs of ending. Brent and U.S. crude are both up more than 20% over the past month, each trading above $100 per barrel. US10Y YTD mountain US10Y in 2026 Those moves, coupled with hotter-than-expected inflation data in recent weeks, have investors expecting a quarter-point rate hike from the Federal Reserve later this afternoon, which would put fed funds at 3.75% to 4.00%. According to the CME Group’s FedWatch tool, there’s a 93% chance the central bank increases its overnight lending rate. “We had previously argued that a Fed rate hike in July would have pushed the 10-year yield lower by bolstering the Fed’s inflation-fighting credibility. That is still possible … But much will depend on the Summary of Economic Projections (especially the Dot Plot), the number of dissenters, and how Fed Chair Kevin Warsh communicates the latest policy decision during his press conference,” Yardeni wrote. The Fed decision is scheduled for 2 p.m. ET. Warsh is then slated to hold a news conference at 2:30 p.m. ET. To be sure, Yardeni remains bullish on stocks over the long term. He reiterated his end-of-decade target of 10,000 for the S & P 500. That’s 32% above current levels. For now, though, “proceed with caution,” said Yardeni, whose first securities industry job was as a Fed economist in 1976.
Ed Yardeni slashes S&P 500 target, says ‘proceed with caution’ in stocks as rates rise
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