Powell exits amid one other bond market surge
Jerome Powell is leaving the Fed chairmanship at a time when the bond market is as soon as once more underneath stress. The ten-year Treasury yield is posting its largest weekly rise since April 2025, climbing 23.5 foundation factors, or 5.39%, in only one week. After ending 2025 close to 4.16%, the yield fell to a low of three.926% earlier than surging to as excessive as 4.599% at the moment. The transfer underscores simply how risky the interest-rate panorama has grow to be — becoming for the shut of one of the crucial turbulent Fed tenures in fashionable historical past.
The ten-year yield curler coaster throughout Powell’s tenure
When Powell formally took over from Janet Yellen on February 5, 2018, the U.S. 10-year Treasury yield was buying and selling close to 2.85%. Throughout his tenure, the Treasury market skilled historic swings. The low level got here through the COVID panic in 2020, when the 10-year yield collapsed to roughly 0.50%, with some intraday trades briefly dipping under 0.40% as buyers rushed into safe-haven belongings. From there, yields staged a dramatic reversal, ultimately peaking close to 5.02% in October 2023 — the very best stage since 2007.
Meaning Powell’s tenure noticed the 10-year yield journey by a variety of greater than 450 foundation factors from the pandemic low to the 2023 excessive — one of the crucial risky interest-rate cycles in fashionable Treasury market historical past.
Inflation surge grew to become the defining macro story
The broader U.S. financial system skilled equally historic swings underneath Powell’s watch. Inflation, measured by CPI year-over-year, fell as little as 0.1% in Might 2020 through the COVID shutdown recession earlier than surging to 9.1% in June 2022 — the very best inflation studying since 1981. That inflation shock finally grew to become the defining macroeconomic occasion of Powell’s chairmanship and compelled the Federal Reserve into its most aggressive tightening marketing campaign because the early Nineteen Eighties.
GDP noticed historic collapse and rebound
GDP development additionally moved by unprecedented extremes. Actual GDP contracted at a -31.4% annualized tempo in Q2 2020 through the pandemic collapse, solely to rebound by +33.8% in Q3 2020 because the financial system reopened. These back-to-back quarters marked the biggest contraction and rebound in fashionable U.S. financial historical past.
Labor market skilled historic extremes
The labor market adopted a equally dramatic path. When Powell took workplace, the unemployment fee stood close to 4.1%. Through the COVID shutdowns, unemployment exploded to 14.8% in April 2020 — the very best stage because the Nice Melancholy period. But the restoration proved equally historic, with unemployment ultimately falling to three.4% in early 2023, the bottom stage since 1969. Right now, the unemployment fee sits close to 4.3%, remarkably near the place it was when Powell first assumed the position.
The main coverage cycles of the Powell period
Wanting again, Powell’s tenure can largely be damaged into a number of main coverage and market cycles:
- 2018 tightening cycle: Powell entered workplace persevering with the Fed’s gradual rate-hiking marketing campaign inherited from the Yellen period.
- 2019 pre-COVID easing: Slowing international development and trade-war considerations led the Fed to pivot towards fee cuts earlier than the pandemic started.
- 2020 COVID disaster: The Fed slashed charges to close zero, launched huge quantitative easing packages, and stabilized monetary markets through the pandemic panic.
- 2021–2022 inflation shock: The Fed underestimated the persistence of post-pandemic inflation, delaying aggressive tightening as inflation pressures accelerated.
- 2022–2023 speedy tightening cycle: Powell then led one of many quickest rate-hiking campaigns in Fed historical past to regain management over inflation expectations.
- 2024–2026 higher-for-longer transition: As inflation steadily eased, the Fed shifted towards sustaining restrictive coverage earlier than ultimately starting the method towards decrease charges.
Powell’s legacy will stay closely debated
Critics will probably level to the delayed response to post-COVID inflation as Powell’s largest coverage mistake. The Fed initially considered inflation as “transitory,” solely to be compelled into an aggressive catch-up tightening cycle as soon as worth pressures grew to become embedded within the financial system. Supporters, nevertheless, will argue Powell efficiently navigated a number of once-in-a-generation crises, together with the pandemic collapse, banking-sector stress, supply-chain disruptions, and the sharpest inflation surge in 4 a long time.
Both manner, Powell’s tenure coincided with one of the crucial risky and consequential macroeconomic intervals ever managed by a contemporary Federal Reserve chair.
