Schwab's Fed Hike Call Is Repricing Bonds and Stocks Right Now

Colin Martin's base case at Schwab is a Fed rate hike in December followed by another in early 2027, a view anchored in core CPI's 3-month annualized rate sitting at 3.75%. That number is not cooperating with the idea that inflation is beaten, and it has the bond market on edge.

The 10-year Treasury yield touched 5% again after briefly dipping near 4.8% in late October. Fed officials Waller, Logan, and Goolsbee have all turned more hawkish in their public remarks, with Goolsbee describing the latest CPI report as borderline disturbing. When three regional presidents are signaling concern in the same week, the fixed-income market tends to listen.

On the equity side, the relationships between Treasury yields, oil prices, and stock performance keep shifting, which is making sector calls unusually difficult. Sonders points to sharp rotations between technology, health care, and consumer staples as evidence that headline index moves are hiding what is actually happening beneath the surface. Tactical positioning in that environment tends to get whipsawed.

Retail investors sat out the sharp dip, then came back aggressively, posting the second-largest Nvidia buying day on record. Sonders argues that kind of reactive behavior illustrates exactly why her preferred approach is rebalancing on portfolio bands rather than trying to time the market around calendar dates or news events.