Powell: Fed will 'wait and see'
Fed Chair Jerome Powell told Harvard the Fed will take a 'wait and see' approach as the Iran war creates large supply‑shock uncertainty, and markets pulled back rate‑hike bets while Treasuries rallied sharply on the repricing. Traders sold off short‑term hawkish positions as headline inflation risks rose but long‑run expectations stayed anchored, shifting the policy debate toward observation rather than immediate action. ( )
Two‑year Treasury yields slid to about 3.79% and 10‑year yields to roughly 4.31% in the session that followed market repricing. (bloomberg.com) Both the two‑ and 10‑year maturities dropped roughly 10 basis points on Monday, with most of the decline occurring before Powell’s classroom appearance. (bloomberg.com) Even after Monday’s pullback, the two‑year yield remains more than 40 basis points higher than its level before the Iran conflict began, reflecting the underlying reprice since late February. (bloomberg.com) Bloomberg and market live‑blogs recorded traders dumping short‑term hawkish bets — pricing that previously implied multiple cuts in 2026 has shifted toward a path that largely removes cuts from the calendar this year. (bloomberg.com) Brent crude has climbed roughly 50% since the conflict began and was trading in the low‑$100s per barrel around the move, keeping headline inflation upside risk on market screens. (bloomberg.com 1) (bloomberg.com 2) The Fed’s March 18 Summary of Economic Projections showed median total PCE inflation at 2.7% for 2026 and 2.2% for 2027, figures officials cited when describing the trade‑off between an oil shock and the labor market. (federalreserve.gov) The FOMC left the federal‑funds target at 3.50%–3.75% at the March meeting and the committee’s dot‑plot continued to indicate a single rate reduction in 2026, according to contemporaneous Fed and CNBC reporting. (federalreserve.gov) (cnbc.com) Market‑probability dashboards showed the shift quantitatively: a March‑26 snapshot had the implied post‑meeting midpoint at about 3.65% for Apr. 29 with only an ~8% chance of a hike priced for that meeting, reflecting the new “observe and wait” market stance. (rateprobability.com)
