Gary Black Says a 'One-and-Done' Fed Hike Could Push Treasury Yields Lower and Be Better for Stocks

The Future Fund‘s Gary Black said on Tuesday that a 25-basis-point Fed rate hike, if positioned as a "one-and-done" move, could push 10-year Treasury yields lower and prove more supportive for equities than a prolonged hiking cycle.

Driving Case for a Hike

In the post on X, the investor said a single hike now could prevent Fed Chair Kevin Warsh from being “forced into a series of rate hikes” later, a path he said “would likely push 10-year Treasury yields higher, hurting growth equities.”

He added that Brent prices are likely to fall if President Donald Trump can negotiate an end to the war, which would also help Republicans in the midterms.

At the time of writing, Brent crude was down 0.89% at $107.54, while WTI futures were down 1.65% at $104.08.

U.S. annual inflation held at 3.4% in August, with gasoline rising 3.9% for the month and accounting for more than a third of the overall increase, according to the Bureau of Labor Statistics.

“A short term rate hike tomorrow if positioned as potentially one-and-done could push 10-year treasury yields lower,” Black added.

Not Everyone Agrees a Hike Would Help

Investor Peter Schiff has argued the opposite, telling Benzinga that “Treasury bonds will continue to sell off” regardless of what the Fed does, since a quarter-point hike is “too little, too late” to meaningfully address inflation.

He’s said the Fed would need much larger increases, along with a shrinking money supply and balance sheet, to actually get ahead of the problem.

Yields Have Already Broken Through 5%

The 10-year Treasury yield rose above 5% Tuesday for the fifth straight session of gains, climbing as high as 5.04% before settling near 5.00%.

The 30-year yield stood at 5.36% and the 20-year at 5.40%.

A 25-basis-point rate hike would be the Fed’s first increase since July 2023, with the CME FedWatch tool putting the odds of a hike at 92.4%.

Warsh is scheduled to speak at a press conference at 2:30 p.m. ET, half an hour after the Fed announces its interest rate decision.

Price Action: The iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF) fell 0.05% to close at $90.82 on Tuesday and gained 0.08% in after-hours trading, while the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) closed 0.27% lower at $80.71.

Benzinga edge rankings indicate the iShares 7-10 Year Treasury Bond ETF has a Momentum score in the 25th percentile and a negative price trend across the short, medium, and long term.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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