Fed Seen Likely to Raise Rates Twice in 2026; Earnings Boost Confidence

Bullish Gator

Schwab strategists expect one firm Fed hike plus a second “very likely” in 2026, discuss rising 10‑yr yields, junk‑bond demand amid AI buildout, shallow hiking-cycle risks, and resilient earnings supporting markets.

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What stands out

Schwab strategists laid out a clear, contested view: one more Federal Reserve hike is likely in 2026 with a second increase described as "very likely," and they tied that stance to rising 10-year Treasury yields and stronger demand in the lower-rated, or "junk," bond market amid AI investment. The clip stands out because it pairs a hawkish policy read with an argument that corporate earnings remain resilient, creating a tension between higher rates and continued profit-driven market confidence.