Barron's Live · Sep 16, 2026 · 39m · 31m saved
With Roger Hallam, Global Head of Rates at Vanguard's Fixed Income Group
Roger Hallam expects the Federal Reserve to raise interest rates this week, and then keep going: at least one more hike this year, most likely in December, and probably another in 2027.
Most bond-market chatter this week was about a single decision. Hallam's point is about the path beyond it, at a moment when global bond yields are climbing everywhere at once.
"We think the Fed is going to hike on Wednesday, and in terms of the DOT's projections, we think it's likely that they show another rate hike this year."
Roger Hallam, global head of rates in Vanguard's Fixed Income Group, spoke with Barron's senior managing editor Lauren Rublin and Barron's Investor Circle reporter Josh Schafer on Barron's Live, the publication's weekly call and podcast, as the Federal Open Market Committee met on September 15 and 16.
The full episode is covered here so you can skip it. 39 minutes of audio, 8 minutes of reading.
Here are the 7 takeaways that matter.
Key Takeaways
Hallam expects at least two more Fed hikes, possibly three — one this week, another most likely in December, and probably one more in 2027
He frames the hikes as removing last year's insurance cuts, not the start of a sustained tightening cycle meant to slow the economy
Forward guidance is effectively gone under Chair Warsh, which Hallam says raises the odds of on-the-day surprises even though he doesn't expect one this week
Rising deficits mean a steeper yield curve over time, not necessarily higher yields today — Vanguard doesn't think Treasury's bond buybacks can offset that structural pressure
Vanguard is overweight bunds versus Treasuries and underweight French and Italian sovereign debt, using the latter as a hedge for overweight investment-grade credit
Heavy AI-related corporate debt issuance has widened credit spreads about 30 basis points versus non-AI sectors, with another $400 billion of hyperscaler issuance expected next year
TIPS don't automatically protect against rising yields — they only help when inflation itself, not real yields, is what's pushing rates up
1. Two More Hikes, Maybe Three
Asked what investors should expect from the Fed this week, Hallam laid out a path that goes beyond Wednesday's decision.
A hike this week, then more to come
"We think the Fed is going to hike on Wednesday, and in terms of the DOT's projections, we think it's likely that they show another rate hike this year, and most likely that will be delivered in December, and it's also pretty likely they could show an additional rate hike next year as well, so at least two, possibly three." — Roger Hallam
He characterized the move as unwinding the insurance cuts the Fed made last year rather than the start of a sustained hiking cycle meant to slow growth. The reasoning: recent inflation data are better than earlier this year, but not good enough to suggest a fast return to the Fed's 2% target. He cited Warsh's Jackson Hole comment that he'd be "hard pressed to describe current financial conditions as restrictive" as the key signal behind the committee's intent to tighten moderately.
