Ed Yardeni Dismisses Trump's 'Severe' 10% Credit Card Cap Ultimatum As 'Trial Balloon' That Won't Fly

Despite President Donald Trump escalating his rhetoric to label high credit card rates as illegal, veteran strategist Ed Yardeni is brushing off the threat of a mandatory 10% cap as political noise that is unlikely to become law.

The ‘Trial Balloon’ Theory

On CNBC Monday, Yardeni addressed the notable decline in major bank stocks like JPMorgan Chase & Co. (NYSE:JPM) and Capital One Financial Corp. (NYSE:COF).

The drop followed President Trump's severe ultimatum that credit card issuers must lower rates to 10% by the Jan. 20 inaugural anniversary or face consequences for “violation of the law.”

Yardeni dismissed the threat as merely one of many administration “trial balloons” designed to test public reaction. He argued that enforcing such a cap would require congressional legislation—not just executive action—and predicted powerful banking lobbyists would ensure it never passes.

“Like this administration puts out a lot of trial balloons and sees which ones make it up into the stratosphere, and I don’t think this one is gonna fly,” Yardeni stated.

Here’s a list of some banking ETFs for investors to consider.

Bullish Despite A ‘Rocky Path’

While acknowledging that political interference with the Federal Reserve and the banking sector creates a “rocky path” for investors, Yardeni maintained his optimistic year-end target of 7,700 for the S&P 500—roughly a 10% upside from current levels.

He views the current market as “earnings-led,” driven by a surprisingly resilient economy that has weathered numerous shocks since 2020.

He anticipates that another strong quarter of record corporate profits will ultimately outweigh political headwinds and geopolitical risks.

Bond Signals Over Political Noise

Separate from the banking issue, Yardeni warned against further Federal Reserve rate cuts, arguing the bond market isn’t signaling a need for them given economic strength.

He noted that “bond vigilantes” have already pushed yields higher despite previous Fed easing. Continued political pressure on Chair Jerome Powell to lower rates unnecessarily could risk sparking an unsustainable stock market “melt-up,” he cautioned.

Stocks Remain Positive In 2026 So Far

The S&P 500 and Dow Jones indices have gained 1.44% and 3.09%, respectively, on a year-to-date basis. The Nasdaq 100 index, on the other hand, has risen by 1.03% in the same period.

The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed higher on Monday. The SPY was up 0.16% at $695.16, while the QQQ advanced 0.083% to $627.17, according to Benzinga Pro data.

The futures of the S&P 500, Nasdaq 100, and Dow Jones indices were trading lower on Tuesday.

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

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