US stocks (^DJI,^GSPC, ^IXIC) fall after and Treasury yields (^FVX, ^TNX, ^TYX) near 5% after stronger-than-expected December jobs report squashed the market’s hopes for further interest rate cuts in 2025.

Yardeni Research chief markets strategist Eric Wallerstein joins Market Domination with Julie Hyman and Josh Lipton to share his read of the equity and bond markets as well as his expectations for the Federal Reserve.

“It’s a lot of really strong growth that’s helping drive [Treasury] yields,” Wallerstein says, adding, “The big issue, and what the bond vigilantes are trying to tell us, is that the Fed definitely is on the verge of making a policy mistake, or they were mistaken to cut rates by 100 basis points when nothing really in the economic data warranted that.”

“I really think the Fed should be on pause for the remainder of the year. I think this report might put them on that path,” he adds.

The strategist remains bullish on equities in the long term despite short-term uncertainty with President-elect Donald Trump returning to the White House later this month. Wallerstein lists several core policy themes in Trump’s first 100 days:

“A strong labor market, strong real [gross domestic product] GDP growth, and strong real wage growth are good for stocks. As long as companies think that their earnings are going to be going higher, which they do, and we’re expecting a really good Q1, maybe 10% year-over-year earnings growth, a little bit better than analysts are expecting.”

Companies will “continue to hire workers” and “continue to spend their rising real incomes and their strong wealth effect and the economy keeps chugging along.”

To watch more expert insights and analysis on the latest market action, check out more Market Domination here.

This post was written by Naomi Buchanan.