Special Report: Middle East Market Volatility

While markets have been known to “climb a wall of worry,” they can struggle during periods of uncertainty.

Events in the Middle East are creating a great deal of uncertainty.

Look no further than the outlook for short-term interest rates. As the chart shows, on February 27, blue was the predominant color, as speculators widely believed that the Fed Funds rate was heading lower from its current range of 3.5 percent to 3.75 percent. But just two weeks later, that all changed.

By March 12, red was the color of choice as speculators anticipated that the Fed might have to raise short-term interest rates by December 31.

This uncertainty with rates has contributed to the market’s volatility. But remember, forecasts are based on assumptions and are subject to revisions—sometimes very quick revisions, as we have seen in the past few weeks. In this instance, political issues, more than financial, economic, and regulatory concerns, may be the main driver of the forecast in the weeks and months ahead. 

Following its March 2026 meeting, Fed Chair Powell said policymakers are navigating sticky inflation, mixed signals from the jobs market, and the unfolding situation in the Middle East. In other words, the uncertainty with Iran has complicated an already difficult situation for the Fed.

It may be a bit cliché, but “time will tell” what’s next for rates. But if you find yourself increasingly unsettled by the news, please reach out.

^{CarsonGroup.com, March 16, 2026}

^{CNBC.com, March 18, 2026}