Jerome Powell Era Sparks Everything Rally

Context

Jerome Powell's tenure as Federal Reserve Chair, beginning on Feb. 5, 2018 (Federal Reserve), coincided with one of the most unusual multi-asset stretches in modern financial history — a period characterized by large directional moves in equities, persistent inflation shocks, and significant swings in interest rates. Market commentators have labeled the sequence an "everything rally," noting that risk assets, safe-haven instruments and certain commodity classes all recorded material gains at different points from 2018 through early 2026 (Yahoo Finance, May 2, 2026). Institutional investors looking for the drivers behind that label need to separate cyclical forces — especially the 2021–2023 inflation and rate cycle — from structural trends such as fiscal expansion and rapid technological adoption.

The timeline of policy and macro shocks is unambiguous: Powell took office in February 2018 (Federal Reserve), headline U.S. consumer price inflation peaked at 9.1% in June 2022 (Bureau of Labor Statistics), and the Federal Open Market Committee pushed its policy rate into a 5.25%–5.50% target range by July 2023 (FOMC statements). Each of those milestones left distinct footprints across asset classes. For example, policy tightening through 2022–23 compressed duration-sensitive valuations while earlier and later liquidity injections propped up risk assets and alternative stores-of-value. The juxtaposition of aggressive tightening with episodes of renewed liquidity is a central reason why multiple asset classes managed positive returns at different intervals — and why some market participants now refer to Powell's Fed years as an "everything rally."

This note dissects the data underlying that characterization, assesses sectoral winners and losers, and outlines the principal risks that remain latent for institutional portfolios. We draw on primary-source macro statistics and market performance snapshots, and we place Powell-era dynamics in a longer historical context to assess persistence and potential mean reversion. For institutional readers seeking deeper strategy context, see our macro hub and strategy primers at topic, which synthesize policy timelines with asset-class returns.

Data Deep Dive

A short list of objective, dated datapoints frames the episode. First, Jerome Powell assumed the Fed Chair role Feb. 5, 2018 (Federal Reserve). Second, U.S. headline CPI peaked at 9.1% in June 2022 before moderating thereafter (Bureau of Labor Statistics). Third, the FOMC raised its target funds rate into a 5.25%–5.50% bracket by July 2023 as it confronted elevated inflation (Federal Open Market Committee). Fourth, financial press coverage including a May 2, 2026 "Chart of the Day" described the aggregate effect as an "everything rally," reflecting the observation that equities, certain commodities and select fixed-income segments delivered positive returns over overlapping windows (Yahoo Finance, May 2, 2026).

These measured facts allow a contrast: inflation climbed from roughly 1.8% annualized in 2019 to a peak of 9.1% in June 2022 — a more than fivefold increase in the headline rate over a three-year span (BLS). The Fed's policy response — an unusually rapid series of hikes starting in 2022 — moved the policy rate from near-zero levels in 2020–21 to the mid-5% area by mid-2023 (FOMC). That policy pivot created a volatile environment where duration losses in long-dated bond portfolios were at times offset by successive rallies in nominal bonds once disinflation arrested yield increases, while equities alternated between drawdowns and new highs as discount-rate assumptions evolved.

Cross-asset correlation patterns during Powell's years merit attention. Traditional negative correlation between equities and bonds broke down intermittently: during early phases of liquidity support (2020–2021) both posted gains, while in the tightening phase (2022) both could decline as growth and valuation pressures hit simultaneously. Commodities such as oil and industrial metals experienced both cyclical demand shocks and supply shocks — oil spiked into 2022 on geopolitical and pandemic-era supply disruptions, later stabilizing as supply/demand rebalanced. These dynamics explain the "everything rally" label: over the full sequence, several asset classes registered net positive outcomes for investors who navigated entry and exit timing correctly.

Sector Implications

Equities: The broad U.S. equity market benefitted from a combination of earnings growth and multiple expansion during periods of abundant liquidity. Technology and large-cap growth sectors captured outsized gains early in the cycle as the discount rate fell; they remained sensitive to rising rates during 2022 but often led recoveries when inflation expectations eased. International equities showed more dispersion; emerging market returns were pulled by commodity strength and U.S. dollar swings, with commodity exporters outperforming import-dependent economies.

Fixed income: The bond market told a more nuanced story. Long-duration assets suffered pronounced drawdowns during the initial hiking cycle as 10-year Treasury yields rose, but subsequent disinflation and renewed demand for duration at certain points produced partial recoveries in price. Investment-grade corporates outperformed high-yield in periods when default risk perceptions rose, but credit spreads compressed dramatically in episodes of restored risk appetite, underscoring the cyclical sensitivity of credit assets to the Fed's stance.

Commodities and alternatives: Energy and industrial metals experienced strong cyclical rallies through 2021–2022; gold and other inflation hedges advanced when real yields fell. Crypto and certain alternative assets displayed idiosyncratic, high-volatility behavior — episodic, large gains in risk-on stretches, sharp contractions when leverage unwindings occurred. For asset allocators, the Powell period highlights the importance of timing and convexity management across these sectors.

Risk Assessment

The principal risks emerging from a retrospective on the Powell years center on valuation and policy regime uncertainty. If markets priced an extended era of low-for-long policy and broad-based liquidity, then a regime shift toward structurally higher neutral rates or persistent inflation would imply valuation compression across equity and fixed-income markets. Conversely, if structural disinflationary forces reassert themselves, the opposite could occur; both scenarios create non-trivial transition risk for portfolios concentrated in duration or equity growth exposures.

Liquidity and crowding risks are also material. Episodes in 2020–2023 exposed how correlated positions and leverage can amplify moves when models unlearn prior correlations. Market structure changes — including passive market share growth and the proliferation of similar quantitative strategies — raise the probability of outsized repricing during shocks. For institutional managers, scenario analysis that stresses both inflation persistence and abrupt disinflation pathways is necessary to quantify balance-sheet and funding vulnerabilities.

Policy credibility forms a final risk axis. The Fed's demonstrated willingness to raise rates into the mid-5% range in 2023 (FOMC) restored nominal anchor credibility after the inflation surge, but any perception of premature easing or policy drift could re-price both inflation expectations and term premia. That channel would affect long-duration assets disproportionately and could reconfigure risk premia across the board.

Fazen Markets Perspective

Contrarian read: labeling Powell's tenure an "everything rally" risks normalizing an episodic coincidence rather than recognizing a sequence of distinct regimes. The coincident gains across asset classes were less a function of a single uniform market impulse and more an artifact of alternating policy and liquidity environments. That observation matters for forward-looking allocation: assuming the same cross-asset dynamics repeat without active repositioning underestimates regime risk.

From a tactical standpoint, we emphasize exposure to optionality and volatility-management tools rather than static allocations that bet on repeat correlation breakdowns. Instruments that offer convexity — defined-benefit hedges, actively managed real-duration buckets, tail-risk overlays — are constructive when markets oscillate between liquidity expansion and withdrawal. For institutional readers seeking granular implementation, our strategy notes and scenario tools are available at topic to model these outcomes under different policy and growth trajectories.

Longer-term, the Powell era should be read as evidence that policy and fiscal interaction can produce atypical cross-asset outcomes; that does not imply permanence. The risk to investors who extrapolate one period's dispersion is that they underweight mean-reverting forces: term premia can reassert, equity valuations can compress, and commodity cycles can reverse. Active governance and adaptive risk budgeting, in our view, are prudent responses.

FAQ

Q: Did Powell's policy directly cause the "everything rally"? Answer: Causation is multi-factorial. Powell's Fed navigated two dominant forces — pandemic-era liquidity and a subsequent inflation shock — but fiscal policy, supply-chain disruptions, and global growth dynamics were equally influential. The Fed's policy actions shaped discount rates and liquidity conditions (Federal Reserve, FOMC), which are key transmission channels, but attributing the cross-asset outcome to a single actor oversimplifies the systemic interaction.

Q: How unusual is cross-asset positive performance historically? Answer: Periods where equities and bonds both rise are rare but not unprecedented—typically occurring when risk appetite increases while inflation and growth expectations remain stable or decline. The uniqueness of Powell's years stems from rapid transitions between such states: quantitative easing and fiscal stimulus lifted multiple asset classes, while inflationary stresses later created synchronized sell-offs and recoveries. Historical episodes (e.g., 2009–2010 post-crisis rebound) provide partial analogs but differ in sequencing and scale.

Q: What should institutional managers watch going forward? Answer: Monitor three indicators with high signal value: (1) inflation trends and their stickiness (CPI metrics, BLS), (2) term structure of interest rates and real yield movements (Treasury yields, swap markets), and (3) liquidity and breadth measures in equity and credit markets (spread compression, ETF flows). Sharp changes in any of these variables will reweight the probabilities of repeating cross-asset rallies versus regime reversals.

Bottom Line

Jerome Powell's Fed years produced a sequence of policy-driven regime shifts that, in aggregate, produced multi-asset gains at various points — a pattern reasonably described as an "everything rally" but better understood as a succession of distinct market regimes. Institutional investors should prioritize regime-aware risk tools and flexible allocation frameworks rather than assuming the past eight years' dynamics will persist unchanged.

Disclaimer: This article is for informational purposes only and does not constitute investment advice.