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Weak job growth raises risks of deeper cuts later despite current Fed pause.
Strong dollar, rising yields favor income ETFs and inverse gold strategies as of now.
The Federal Reserve kept interest rates unchanged at 3.5%–3.75% following its two-day policy meeting on Wednesday, in line with market expectations. Alongside the decision, policymakers released their first Summary of Economic Projections (SEP) for 2026, maintaining a median forecast of one rate cut for 2026, unchanged from their December outlook.
Markets reacted negatively after Fed Chair Jerome Powell highlighted growing uncertainty tied to the recent oil shock, noting that progress on inflation has been slower than anticipated.
Labor Market Shows Signs of Weakness
Powell acknowledged that job creation has slowed significantly. Recent data showed the unemployment rate ticking up to 4.4% in February, alongside a loss of 92,000 jobs. Downward revisions to prior months further highlight a stagnating employment trend, raising concerns about economic resilience.
Delayed Cuts May Lead to Bigger Moves Later
Rising oil prices could keep inflation elevated in the short term, prompting the Fed to remain cautious. However, prolonged uncertainty may weigh on hiring and economic activity, potentially forcing the Fed to implement more rate cuts later. For now, policymakers appear inclined to wait and assess incoming data before making their next move.
No Stagflation for Now
Fed Chair Powell dismissed concerns that the U.S. economy is entering stagflation—a challenging mix of high inflation, weak growth, and elevated unemployment. While acknowledging some tension between the Fed’s goals of price stability and a healthy labor market, Powell emphasized that current conditions do not fit the definition of stagflation.
He noted that the term is rooted in the 1970s, when unemployment was in double digits, inflation was extremely high, and overall economic stress was severe, as quoted on Yahoo Finance.
Time for Inverse Gold?
Gold has dropped for a seventh straight day as the escalating war in the Middle East has driven oil prices higher and reduced prospects for a near-term U.S. interest-rate cut. Gold typically performs better in a low-rate environment. Gold performs better in a low-rate environment. ProShares UltraShort Gold (GLL) has gained about 13.7% over the past week and has added about 5.7% over the past month (as of Mar. 18, 2026).
Time for U.S. Dollar ETFs?
As the Fed is likely to cut rates less frequently this year, the U.S. dollar may gain strength. Invesco DB US Dollar Index Bullish Fund (UUP) has added 0.9% over the past week and gained 2.7% over the past month.
Time for benchmark-Beating Cash-Like ETFs?
Benchmark U.S. Treasury yields have risen from 4.05% to 4.26% so far this month, with a high of 4.28% reached on March 13, 2026. Note that legendary investor Warren Buffett has typically focused on companies with strong cash reserves and cautioned against making investments merely to reduce cash holdings.
Investors can consider the cash-like ETF JPMorgan Ultra-Short Income ETF (JPST - Free Report) in uncertain times or when value is hard to find elsewhere. The ETF is down 0.1% this year (as of Mar. 18, 2026) and yields 4.36% annually. It charges 18 bps in fees.
High-Dividend ETFs: a Good Bet
Since there is an uptick in bond yields, ETFs that offer higher current income may remain in demand. Global X SuperDividend ETF (SDIV - Free Report) (yields 9.62% annually and charges 58 bps in fees) could be considered in this kind of scenario to earn solid current income. The ETF is up 2.6% this year, beating State Street SPDR S&P 500 ETF Trust (SPY - Free Report) which is down 3.2% in the year to date frame.
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One Fed Rate Cut for 2026? ETFs in Focus
Key Takeaways
The Federal Reserve kept interest rates unchanged at 3.5%–3.75% following its two-day policy meeting on Wednesday, in line with market expectations. Alongside the decision, policymakers released their first Summary of Economic Projections (SEP) for 2026, maintaining a median forecast of one rate cut for 2026, unchanged from their December outlook.
Markets reacted negatively after Fed Chair Jerome Powell highlighted growing uncertainty tied to the recent oil shock, noting that progress on inflation has been slower than anticipated.
Labor Market Shows Signs of Weakness
Powell acknowledged that job creation has slowed significantly. Recent data showed the unemployment rate ticking up to 4.4% in February, alongside a loss of 92,000 jobs. Downward revisions to prior months further highlight a stagnating employment trend, raising concerns about economic resilience.
Delayed Cuts May Lead to Bigger Moves Later
Rising oil prices could keep inflation elevated in the short term, prompting the Fed to remain cautious. However, prolonged uncertainty may weigh on hiring and economic activity, potentially forcing the Fed to implement more rate cuts later. For now, policymakers appear inclined to wait and assess incoming data before making their next move.
No Stagflation for Now
Fed Chair Powell dismissed concerns that the U.S. economy is entering stagflation—a challenging mix of high inflation, weak growth, and elevated unemployment. While acknowledging some tension between the Fed’s goals of price stability and a healthy labor market, Powell emphasized that current conditions do not fit the definition of stagflation.
He noted that the term is rooted in the 1970s, when unemployment was in double digits, inflation was extremely high, and overall economic stress was severe, as quoted on Yahoo Finance.
Time for Inverse Gold?
Gold has dropped for a seventh straight day as the escalating war in the Middle East has driven oil prices higher and reduced prospects for a near-term U.S. interest-rate cut. Gold typically performs better in a low-rate environment. Gold performs better in a low-rate environment. ProShares UltraShort Gold (GLL) has gained about 13.7% over the past week and has added about 5.7% over the past month (as of Mar. 18, 2026).
Time for U.S. Dollar ETFs?
As the Fed is likely to cut rates less frequently this year, the U.S. dollar may gain strength. Invesco DB US Dollar Index Bullish Fund (UUP) has added 0.9% over the past week and gained 2.7% over the past month.
Time for benchmark-Beating Cash-Like ETFs?
Benchmark U.S. Treasury yields have risen from 4.05% to 4.26% so far this month, with a high of 4.28% reached on March 13, 2026. Note that legendary investor Warren Buffett has typically focused on companies with strong cash reserves and cautioned against making investments merely to reduce cash holdings.
Investors can consider the cash-like ETF JPMorgan Ultra-Short Income ETF (JPST - Free Report) in uncertain times or when value is hard to find elsewhere. The ETF is down 0.1% this year (as of Mar. 18, 2026) and yields 4.36% annually. It charges 18 bps in fees.
High-Dividend ETFs: a Good Bet
Since there is an uptick in bond yields, ETFs that offer higher current income may remain in demand. Global X SuperDividend ETF (SDIV - Free Report) (yields 9.62% annually and charges 58 bps in fees) could be considered in this kind of scenario to earn solid current income. The ETF is up 2.6% this year, beating State Street SPDR S&P 500 ETF Trust (SPY - Free Report) which is down 3.2% in the year to date frame.