Warsh's debut session: three factors putting pressure on markets — oil, interest rates, and historical statistics
Today, Kevin Warsh will chair his first Federal Reserve meeting as chairman. Markets approach this event amid an oil crash and extremely cautious rate expectations. Several factors are in focus: from the historical pattern of drawdowns during Fed leadership changes to the return of Iranian oil to the global market.
Rate Frozen Until April 2027
The main intrigue is how Warsh will shape his rhetoric at the start of his term. According to CME Group data, the market barely prices in any rate cut: the probability of maintaining the 3.50–3.75% range exceeds 97%. Analyst Brett notes that the chances of a rate cut remain nearly zero until April 2027, and only rise to about 8% by December 2027. This means monetary policy will remain tight for at least another year.
Historical Pattern: Minus 12% in 90 Days
Analyst Bull Theory highlights a troubling statistic: over the past century, with each of the 12 new Fed chairs, the S&P 500 index fell within the first 90 days of their tenure. The average drawdown was about 12%. Alan Greenspan posted the worst result with a 33% crash, while Ben Bernanke had the best at just 2%. Under Jerome Powell, the first 90 days brought a 7% decline, and under Janet Yellen, a 4% drop. No new Fed chair has avoided a drawdown, and now the 90-day countdown begins for Warsh.
Oil Crashes 15%: The Iran Factor
The backdrop is further shaped by a sharp drop in oil. As noted by Coin Bureau, Brent crude crashed about 15% and fell below $78 per barrel—this marks the fifth consecutive losing session, the longest decline streak in 2026, and the lowest level since early March. The reason is the return of Iranian oil: tankers carrying over 2 million barrels are already leaving the Strait of Hormuz following a deal between the US and Iran.
Bloomberg Intelligence strategist Mike McGlone warns that oil, gold, and copper could end up in a losing position relative to US stocks. In his view, stock market volatility has remained suppressed for too long amid growing risks in commodity assets, and the boom in initial public offerings (IPOs), including SpaceX, could signal a market peak—similar to how Bitcoin ETFs served as such a signal in 2024.
McGlone rates the influence of the US stock market on oil, gold, and copper at 10 out of 10 as a factor that will determine their future movement. Cheaper oil reduces inflationary pressure, which could give the Fed more leeway in the future. But for now, all three factors—weak oil, cautious rate expectations, and the troubling statistics of Fed leadership changes—combine to create a tense backdrop, where Warsh's decision will become the main guide for markets.
Cryptalist Analytical Conclusion: Markets are entering a zone of heightened volatility. The historical pattern of drawdowns during Fed leadership changes, combined with an oil shock and hawkish rhetoric, creates a perfect storm for risky assets. Investors should prepare for a correction in the next 90 days.