Today Kevin Warsh will chair a meeting of the US Federal Reserve (Fed) for the first time as its head. Markets are approaching this event against the backdrop of a collapse in oil prices and extremely cautious expectations on the rate. Analysts point to several pressure factors at once — from the history of drawdowns when the Fed changes its head to the return of Iranian oil to the world market.

The main intrigue is how Warsh will frame his rhetoric at the start of his term. According to CME Group data, the market is pricing in almost no rate cut: the probability that the 3.50–3.75% range will be held exceeds 97%. As analyst Brett notes, the odds of a cut remain near zero all the way to April 2027, and only by December 2027 do they rise to roughly 8%.

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Worrying statistics and pressure on the new Fed head

The Bull Theory analyst draws attention to a historical pattern. According to his data, under each of the past 12 new Fed chairs the S&P 500 fell in the first 90 days of their tenure. The average drawdown was about 12%.

The worst result was shown by Alan Greenspan — a 33% collapse, the best by Ben Bernanke — just 2%. Under Jerome Powell the first 90 days brought a 7% decline. Under Janet Yellen — a 4% drop. Not a single new Fed head managed to avoid a drawdown, and now, as Bull Theory points out, the 90-day countdown is beginning for Warsh.

The analyst Brett calls "Warsh’s independence" the key challenge. In his words, the market will want to understand whether the new chair will preserve the independence of monetary policy or yield to pressure from Donald Trump. The mood of the markets for the coming half-year will largely depend on the tone and rhetoric of his first address.

Source: BeInCrypto