March Market Madness

Fed Day, Rate Expectations, and the Iran Effect

We have a special March Madness offer we’ll tell you about below, but first, here’s a look at what Bespoke is watching today.

Today is the penultimate Fed Day for Chair Powell, who has headed up the Fed since 2018. Since the modern Fed began in the mid-1990s, there have been just four Fed Chairs: Greenspan, Bernanke, Yellen, and Powell.

Below is a chart showing the average path that the S&P 500 has taken on Fed Days under each of these four Fed Chairs. While Bernanke was the best Fed Chair for market performance on Fed Days with the S&P averaging a one-day gain of 0.5%, Powell is the Chair that has seen the smallest Fed Day gains at just 0.06%. In order to surpass Yellen at this point, the S&P would need to average a gain of 3.22% on Powell’s final two Fed Days. It’s possible, but not likely!

Markets are pricing a zero percent chance of a rate cut at today’s meeting. Up until late February, though, markets were still betting that we’d see at least two rate cuts before the end of 2026. As shown below, since the Iran attacks began, this pricing has completely shifted.

The current odds for no rate cuts by the end of 2026 (30.5%) are now higher than the odds for two rate cuts (28.4%). President Trump has been going after Chair Powell for not cutting rates more over the last year, but the attack on Iran is now the main hurdle in the way of more rate cuts.