Rising Global Bond Yields, New Apple CEO, Memory Trade’s Momentum 9/1/26

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**Kelly Evans** (1:02)
Bond market volatility is weighing today as tensions reescalate in Iran. Welcome to Power Lunch. I'm Kelly Evans alongside Dominic Chu. Brian Sullivan is on assignment. The question for investors, can strong earnings and the resurgence of the tech trade overcome some of these market headwinds? We'll ask Northern Trust's Chief Investment Officer, Joe Tanious.

**Dominic Chu** (1:22)
Sitting right to my left right now. Plus, a new era at Apple.
John Ternus takes over as CEO, succeeding Tim Cook after a transformative 15-year run. What will investors demand from Apple's next leader? And earnings, of course, on deck. Dell and Palo Alto Networks both reporting with both stocks up triple digits over the past six months. Those expectations, believe it or not, yes, they are high. And we've got you covered from all angles, Kelly.

**Kelly Evans** (1:48)
Let's begin with this Treasury market scare. Stocks are lower as global yields jump just 13 days after Treasury stepped in to support the bond market or try to cap those longer term rates. The US 10-year hitting its highest level since January of 2025 And yes, this move in part is happening and spreading and prompted by these moves overseas. Italian and Spanish yields, three-year highs. Japan's 10-year touched 3% for the first time. That's the highest level since 1996 Our next guest isn't panicking yet. He still likes risk assets, says investors should keep buying. Joining us now is Joe Tanious, the Chief Investment Officer at Northern Trust Asset Management. Joe, it's good to see you.

**Joe Tanious** (2:26)
Great to be back.

**Kelly Evans** (2:27)
We were talking to Barry Knapp last hour, who thinks that Warsh is going to hike in September. He thinks that would be a mistake and that this could all now cascade into this typical September kind of swoon that we often experience.
With all of this in mind, how would you be thinking about things?

**Joe Tanious** (2:43)
Well, let's just separate a couple of things. There's what we believe Warsh might do, and there's what we believe Warsh and the FOMC should do, because those are not necessarily one and the same. We've heard very clearly from Warsh, we want to move away from Fed guidance, forward guidance, focus on the data. He also talked quite a bit about inflation, focusing on that 2% target right for PCE, and the market has interpreted that as being somewhat hawkish, understandably.
Now you're faced with a bit of a credibility issue.

**Kelly Evans** (3:13)
Let me start with the, and I know we're going with this, but so do you think he is going to hike?

**Joe Tanious** (3:18)
I think right now it's a coin toss. It's 50-50. I think the market has that right as far as what's priced in.

**Kelly Evans** (3:23)
Because if he doesn't, it's a credibility issue.

**Joe Tanious** (3:24)
It's a credibility issue. Unless you get some really encouraging inflationary data between now and the next Fed meeting, I think they're effectively being pushed into hiking. Now, should they actually hike is a whole other conversation.

**Kelly Evans** (3:38)
Let's talk about that piece, and I know this is not where you wear your hat, but I do want to know, what do you think they should do right now? What would be appropriate?

**Joe Tanious** (3:45)
I think my perspective, I would be on hold. Think about the inflationary pressure that we're seeing today. Let's be clear, it is a little sticky, right? We know this, we know this. Long-term inflation expectations fortunately remain anchored, but what's been driving this inflationary pressure? It's been tariffs, which are rolling off, and of course, it's been higher energy prices, and we continue to believe the worst of that shock is behind us. So ask yourself, what is hiking interest rates? What is tightening monetary policy going to do in this environment? What is it potentially going to do to the housing market? What is it going to do to the consumer, which is already facing a bit of an affordability issue? I'm just not so sure it makes sense, especially when you think about inflation expectations. You think about the forecast for inflation in 2027, consensus is really expecting that to come back down. I'm not so sure it makes a lot of sense.