Ed Yardeni has a pretty optimistic view of where stocks are headed—he's calling for his "Roaring 2020s" rally to keep rolling through 2026. But there's a catch, and it's a big one. The aggressive fiscal stimulus coming from the Trump administration could throw a wrench into the whole scenario.
Yardeni's 2026 Forecast: Strong Rally Ahead, But Tax Refunds Could Wake the Bond Vigilantes

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When Tax Refunds Meet Bond Market Reality
Here's where things get interesting. In a recent interview, Yardeni laid out what he sees as the main threat to his bullish outlook. President Trump and Treasury Secretary Scott Bessent have been talking up "humongous refunds" for taxpayers, potentially going back retroactively to the start of the year.
Sounds great if you're getting a check, right? The problem is what happens when you flood the economy with that much liquidity all at once. Yardeni's worried about waking up the "bond vigilantes"—those investors who express their displeasure with excessive government spending by dumping bonds, which pushes interest rates higher.
"The biggest risk is that bond vigilantes don't like all of this stimulus," Yardeni cautioned. Add in some renewed Quantitative Easing on top of heavy fiscal spending, and 2026 could get bumpy in the bond market.
Still Betting Big on Stocks
Despite the fiscal alarm bells, Yardeni isn't backing away from his equity optimism. He's forecasting the S&P 500 will climb to 7,700 in 2026, which works out to roughly a 10% gain from where we are now.
What's driving that confidence? An AI-driven productivity boom that should boost corporate earnings across the board. And he's not just talking about the "Magnificent 7" tech giants here—he thinks the benefits will spread beyond the usual suspects, justifying higher valuations more broadly.
The Economy of Haves and Have-Nots
Yardeni has a colorful way of describing the current economic split. He calls it the "Chick-fil-A Economy"—Baby Boomers sitting on substantial assets with minimal debt, spending freely at every turn, while younger generations can't even think about affording a house.
"The Baby Boomers are living longer… but meanwhile, kids cannot buy a house," Yardeni observed.
That divide is what's pushing the administration toward these massive refund policies. They're trying to address the frustration among the "have-nots," even if it means potentially riling up the bond market in the process.
Where Markets Stand Now
Looking at year-to-date performance, the S&P 500 has climbed 17.67%, while the Nasdaq Composite and Dow Jones have gained 21.75% and 14.32%, respectively.
On Monday, though, things pulled back a bit. The SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust ETF (QQQ), which track the S&P 500 and Nasdaq 100 indexes, both closed lower. SPY dropped 0.36% to $687.85, while QQQ declined 0.48% to $620.87.
Futures for the Dow Jones, S&P 500, and Nasdaq 100 indices were trading lower on Tuesday as well.
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