Rates — Fed day at a 5% 10-year: the hike is priced, the cycle is not; Yardeni cuts the S&P target to 7,900

The Morning 10

Rates — Fed day at a 5% 10-year: the hike is priced, the cycle is not; Yardeni cuts the S&P target to 7,900

1. 1 Rates into the decision: the 10-year closed 4.996% after 5.008% intraday, its highest close since October 2023; the 30-year 5.36%, the 5-year 4.83%, the 13-week bill 3.96%; the 2-year about 100 basis points above the funds rate, the widest since 2022 — a hike priced at four in five, a cycle being priced by the curve
2. 2 Yardeni cuts: S&P 500 year-end target 8,400 → 7,900, the 8,400 moved to mid-2027, 2027 EPS unchanged at $425, forward P/E 19.8 → 18.6; Roaring 2020s odds 80% → 70%, bearish 20% → 30%; ‘we will worry about a debt crisis when the bond market worries about one — we are starting to worry now’
3. 3 Tuesday’s closes, the rates day: S&P 500 ETF $758.83 (−0.3%) — under Thursday’s $757.83 all afternoon, back above it at the bell; Nasdaq-100 fund $706.47 (−0.4%) above 704; Dow fund −0.5%, Russell 2000 fund −0.5%, equal-weight −0.2%; volatility 17.5; oil +2% for energy, the ex-tech Nasdaq −1.2%
4. 4 The sort, day two, softened at the close: semiconductor ETF +1.0% to $502.07, still under $505 — AMD +2.8% to $507.32, Marvell +2.4%, Arm +1.7%, Nvidia +1.1% to $213.38, Micron +0.9%, memory ETF +1.9% to $55.85; the equipment names recovered from −1% to −2% at midday to flat — Lam $273.54, Applied Materials $424.00, KLA $168.98; Broadcom −1.2%, SanDisk −0.9%
5. 5 Our indices on Tuesday’s closes: Rubin −0.3% to 1,848.75 (−6.8% on the week, −14.2% on the month, +79.9% for the year) — EDA & Chip IP −1.6%, DC Construction −1.6%, Grid & Power +1.3%; HALO −1.0% to 1,008.37, its Asia-Pacific sleeve −4.2%; AW40 −1.2% to 934.42; the agentic ecosystem +0.3% to 1,602.15, Foundation Models −5.7% against Security +1.9% and Operations +2.0%; Euro-AI flat, Defense +1.9%, Enterprise AI −1.9%
6. 6 Print record, resolved: Oracle −8.3% from its $152.94 entry — sold, under the $148.35 line; Adobe +3.9% from $248.83 — paid, above the $256.29 line, the card’s second payment in eleven prints and the first since June 2024; both next print 9 December
7. 7 Asia into the decision: Kospi +0.7% to 6,674, SK Hynix +2.6%, Samsung +1.3%; Taiex +0.7% to 45,840, TSMC −0.4% at NT$2,375; Nikkei +0.3% to 63,668, Advantest +0.4%, SoftBank −1.9%; Hang Seng flat, CSI 300 +0.7%, Nifty +0.5% — the yen 155.3 with the Bank of Japan expected at 1.25% on Friday
8. 8 The other prices: Brent $108.16 after $108.75, above Thursday’s $107.63 settlement for a second day; WTI $104.80; gold $4,364, +0.7% into the decision; silver $65.09, +1.9%; the dollar index 99.6; bitcoin $75,800, the crypto index −4% on Tuesday; energy was Tuesday’s only bought sector, +2.0%
9. 9 The wires this morning: ‘Warsh holds briefing after Fed meeting as interest rates expected to rise’ (PBS) · ‘Trump and the Federal Reserve are on a collision course over interest rates’ (NBC) · ‘Gold gains with Fed rate decision in spotlight’ (Reuters) · ‘If the Fed hikes rates, here’s how the stock market might respond’ (Marketplace) — the story is the hike; the dots and the dissents are where the day is decided
10. 10 The clock: retail sales 12:30 UTC; the Fed decision, projections and dot plot 18:00, Chair Warsh 18:30; Bank of Japan Thursday–Friday, expected 1.25%; quarterly expiry Friday; Micron next week — and the levels: 757.83 held by a dollar, 704 and 708.69, 505 with the equipment names, 5.00% on the 10-year, 155 on the yen, $107.63 on Brent, $58 on memory, 6,600 on the Kospi

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Daily Pulse — Rates — What a 5% 10-Year Costs: Yardeni’s Multiple, the Fed’s Dots and the AI Trade

The Federal Reserve decides at 18:00 UTC with the 10-year Treasury yield at 4.996%, its highest close since October 2023 after printing 5.008% on Tuesday morning. A quarter-point hike is priced; a cycle is what the curve is pricing — the 2-year sits about 100 basis points above the funds rate, the widest gap since 2022. Ed Yardeni answered the yield on Tuesday by cutting his year-end S&P 500 target from 8,400 to 7,900 with earnings unchanged: the same $425 for 2027 at 18.6 times instead of 19.8. That is the arithmetic of a 5% 10-year — a multiple, not an earnings story — and it is the arithmetic the AI trade has been doing since the weekend. Today’s Pulse works through what 5% costs: the index at its lines, the two halves of the AI trade, and the one reading in the curve that decides whether tonight’s hike is a step or the start of a sequence.

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On the tape

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