Happy Wednesday, investors. The most cautionary refrain in financial markets is “this time is different.” Usually, not much changes for investors even when decades go by. I bring this up because all signs point to Jerome Powell doing what his three predecessors did as they left office.

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Powell’s legacy on inflation

The Federal Reserve is unlikely to cut interest rates today even though inflation has come in cooler-than-expected four consecutive months in a row. 

Policymakers are set to maintain their “wait and see” approach on account of risks tied to tariffs, which means Jerome Powell is following the footsteps of the last three Fed chiefs, who all served a hawkish final year in the job. 

“Powell’s reluctance to cut rates is classic final-year Fed Chair behavior, but markets have a history of looking through this predictable rhetoric,” wrote DataTrek Research co-founders Nicholas Colas and Jessica Rabe in a note to clients. 

Investors, they added, realize policymakers are thinking of their inflation-fighting legacies at this stage.

None of the last three Fed leaders — Alan Greenspan, Ben Bernanke, Janet Yellen — eased monetary policy during their final 12 months in office.

• Greenspan hiked rates 100 basis points up to 2006

• Bernanke kept rates on hold to 2014

• Yellen hiked 75 basis points up to 2018

What’s notable, too, is that the stock market averaged a 15.9% return across each of those 12-month stretches of tightening and steady policy.

Traders are currently pricing in two rate cuts for 2025, according to CME data.

That mirrors traders on the prediction platform Kalshi, who also anticipate two cuts.

In recent months, Powell’s decision to hold rates steady has drawn valid criticism from market-watchers including President Trump, who christened Fed Chair Jerome Powell with the nickname “Too Late.”

However, as Opening Bell Daily reported Monday, the Israel-Iran conflict and sudden potential for sustained higher oil prices poses an unforeseen inflation risk.

That’s made Powell look unintentionally prescient for standing pat.

Still, inflation expectations haven’t surged with the latest geopolitical developments, based on 5-year and 10-year breakeven rates. 

At the start of this week, those hovered at 2.32% and 2.30%, respectively, both of which are roughly 10 basis points lower than one month ago.

In any case, Powell looks ready to pursue the same path as his predecessors.

Markets understand this, and so have not shown much concern over the lack of rate cuts.  

“He wants to end his tenure as an archetypal central banker: focused on inflation and political independence,” said Colas and Rabe. “Barring an exogenous shock, he will therefore be cautious in word and action.”

Market snapshot

Elsewhere

🚨President Trump called for unconditional surrender from Iran. In comments Tuesday, he said the country should bring its conflict with Israel to an end, and that it should not be a mere ceasefire. He is reportedly considering a range of options for next steps. (Axios)

📊 Look for the Fed’s dot plot today. Policymakers’ outlook for interest rates will be the biggest thing to watch this afternoon, as it will shed light on how the central bank is thinking about inflation and the jobs market. (CNBC)

📱 Robinhood is launching new tools to lure new traders. It will roll out advanced charting on mobile for deeper market analysis, as well as a feature to simulate returns for options trades. It aims to expand beyond retail trading to become a full-service financial services company. (WSJ)

This undervalued small-cap stock could double by 2026

That’s according to an investment veteran overseeing $31 billion in assets. He told our Best Ideas Club members why he’s betting on this aerospace stock right now.

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Rapid-fire

• Retail sales slide in May on lower gas and auto sales (Yahoo Finance)

• Amazon’s corporate workforce may shrink as AI takes routine tasks (Reuters)

• Gold has surged 28% this year as uncertainty grips markets (Barron’s)

• Senate passes GENIUS Act to provide further clarity for stablecoin rules (X)

• Marriott’s CEO says the company hasn’t seen weakness in summer travel demand (Yahoo Finance)

• There are structural reasons Gen Z feels so trapped in this economy (Blog)

• Solar stocks tumbled after lawmakers opt to end tax credits for the sector (Barron’s)

• The Energy Select Sector SPDR Fund hasn’t moved much over the last year but geopolitical tensions could change that (MoneyShow)

Last thing

Friendly reminder that US markets are closed Thursday for Juneteenth. We’ll see you back here on Friday.

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

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