MW Citrini made a famous call about AI. The new bet is that the market is wrong on the Fed.

By Barbara Kollmeyer

Firm recommends buying March 2027 rate futures while shorting U.S. stocks

A customer refuels his car at a gas station in downtown Zagreb, Croatia on March 23, 2026. Higher gas prices from the Iran conflict will make it hard on consumers and pave Fed rate cuts, argues Citrini Research.

Hopes are building around a peace plan, with stocks ready to rally out of the gate on Wednesday, and oil dropping.

The surge in oil and other commodities has the market rethinking its interest-rate stance. Before the war, the market was expecting at least two rate cuts with a nearly 40% chance of even more reductions, according to the CME FedWatch tool. Now it's expecting no change this year with a 17% chance of a hike.

Our call of the day from Citrini Research, says markets are getting this bet wrong.

Founded by James van Geelen, Citrini went viral with an AI doomsday report in February that caused a meltdown for software stocks.

In a fresh chat post on its Substack, Van Geelen predicts the Fed will "look through" the shock of higher oil prices and cut interest rates within a year. The research group is hence making a bullish bet on three-month Secured Overnight Financing Rate futures for March 2027 (SR3CH27) and pairing that with a short position on equities. Citrini said it's "full size in this position" after building it up for Monday and Tuesday.

SOFR represents the interest rate used by major banks and financial institutions for overnight lending. Futures based on SOFR allow an investor to bet on where short-term interest rates are going.

This chart shows rate-cut bets plunging as the Iran conflict began. The lower the number, the higher the implied interest rate.

He maintains that there won't be hikes. "I think that essentially this is recency bias in action. The last oil shock everyone experienced was 2022, when rates were 0% and CPI was >5% and the Fed raised rates over the zero lower bound because they had no other choice," wrote Citrini.

"We live in a different world now, rates are close to neutral. If oil stays high, it would be restrictive enough simply to leave them where they are while oil prices filter through the rest of the economy and cause a slowdown that you can cut into," he adds.

The Fed knows raising rates won't create more oil supply, and are unlikely to hike when the jobless level keeps trending higher, he said. "They will look through the shock ... Warsh or Powell, doesn't matter. This isn't the same as having to raise rates off 0% to combat inflation caused by massive fiscal stimulus."

If the Iran war is resolved in a month, as the stock market believes, the consumer will still be weaker due to higher gas prices, and short-term interest rates will likely be reverting to where they were four weeks ago, he said. If the war doesn't end, stocks will fall and that short-term interest rate trade could see some pain, but will be offset by a bet on stocks falling.

Ultimately, with Americans deeply invested in the stocks, the hit to markets "will result in the weakness being too strong for the market to entertain the Fed not cutting rates over the next 12 months," he said.

The researcher suggests taking care with a short bet on equities, given any social-media posts related to the war from President Donald Trump could quickly cause big rallies. He's ready to bail from the bet against stocks if the S&P 500 SPX reaches 6,750.

The markets

U.S. stock futures (ES00) (YM00) (NQ00) are rallying and oil prices (CL.1) (BRN00) are tumbling on cease-fire hopes. The yield on 10-year Treasury notes BX:TMUBMUSD10Y is down, and gold (GC00) and silver (SI00) are climbing.

   Key asset performance                                                Last       5d       1m       YTD     1y 
   S&P 500                                                              6551.07    -2.46%   -4.92%   -4.30%  13.41% 
   Nasdaq Composite                                                     21,760.48  -3.20%   -4.83%   -6.37%  19.09% 
   10-year Treasury                                                     4.392      18.90    35.40    22.00   7.10 
   Gold                                                                 4390.9     -12.38%  -14.91%  1.35%   45.10% 
   Oil                                                                  91.53      -4.68%   38.51%   59.43%  32.27% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

The U.S. has come up with a 15-point peace plan, with Turkey, Egypt and Pakistan as mediators angling for a U.S.-Iran meeting in the next 48 hours, according to reports. Meanwhile, Gulf countries report continued attacks.

OpenAI has shuttered its Sora AI video app, ending a $1 billion deal with Disney $(DIS)$.

Meta's $(META)$ new stock option program is worth millions of dollars for some executives, if the tech giant hits a $9 trillion market capitalization by 2031. Also, a Mexico jury has ordered Meta to pay $375 million over charges it prioritized profits over children's mental health and safety.

Import prices and current account data are due at 8:30 a.m.

A $69 billion sale of 5-year Treasury notes is coming, one day after a weak auction of 2-year notes.

Senators are sounding hopeful about a funding plan to end the partial government shutdown causing long waits at airports.

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The chart

The chart from a team of commodity analysts at Goldman Sachs explains how around 80% of the Bloomberg Commodity Index is exposed to the Iran conflict either directly or indirectly. That's likely to "raise inflation while weighing on growth - an unfavorable mix for both bonds and equities," say Lina Thomas and Daan Struyven. And that drives home "the insurance value that commodities can provide within portfolios," they say.

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m. Eastern:

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   GME     GameStop 
   AMZN    Amazon 
   MU      Micron Technology 
   MSFT    Microsoft 
   TSM     Taiwan Semiconductor Manufacturing 
   PLTR    Palantir 
   AAPL    Apple 
   AMD     Advanced Micro Devices 

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-Barbara Kollmeyer

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March 25, 2026 06:55 ET (10:55 GMT)

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