Company Interview / The Fed hike José says is inevitable

Key points:

Torres expects at least one more US rate hike in 2026Sees long‑end yield moves as signalling persistent inflation concernsHighlights AI‑driven capex and strong $AMZN and $MSFT earnings as tech tailwinds

José Torres from Interactive Brokers sets out a hawkish view on US rates, arguing the Federal Reserve risks falling behind the curve. Torres notes a sharp steepening in the US yield curve, with long‑dated Treasuries above 5%, which he reads as the bond market signalling concern that above‑target inflation could persist for years. He expects US CPI to drift into the high‑2% range by year‑end, helped by disinflation in housing, but warns the Middle East energy shock may keep price pressures elevated.

Torres is “absolutely convinced” the Fed will need to hike again before year‑end, pointing to the two‑year Treasury yield and resilient US data: unemployment claims near multi‑decade lows, robust consumer spending, and renewed housing strength. He also highlights dollar weakness as other central banks, including the ECB, Bank of Japan and Reserve Bank of Australia, push rates higher, which he views as damaging to US policy credibility.

On equities, Torres flags strong AI‑related capital expenditure and upbeat earnings commentary from Amazon ($AMZN) and Microsoft ($MSFT) as supporting revenue growth and chip demand. He sees the Nasdaq 100’s rebound as logical after a 11–12% pullback, while rate‑sensitive indices like the Dow Jones and Russell 2000 struggle with higher long‑term yields. In Asia, he expects the Bank of Japan to hold for now but signal future hikes, seeing greater near‑term risk in South Korea around Samsung and SK Hynix.