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SP500BullishEconomicnews

High materiality8/10

Fed rate hike may lift stocks if long-term yields stabilize

Sep 14, 2026, 2:18 PM EDT1 sourcesAI-analyzed

Why it may matterVerify against the original reporting

Despite higher policy rates, the potential for inflation credibility to anchor long-term yields could reduce bond volatility and support stocks; a hawkish-to-credible stance may paradoxically lift equities if the market believes the curve will normalize, as described by strategists.

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What happened, with direct paths to the underlying reporting

Markets are pricing a September rate hike to 3.75–4.00% with two more increases, hoping inflation credibility will anchor long-term yields. If credibility improves, bond pressure could ease and equities may rally despite higher policy rates. The outcome hinges on Warsh's messaging and the bond-market response as yields move.

Fed expected to raise funds rate to 3.75–4.00% with two more hikes priced in.
Unusual rally possible on a hike if inflation credibility improves.
10-year yield hits 5% for first time since 2023, weighing on equities.
Bond-market normalization could support equities toward year-end.

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