The first rule of understanding where markets actually stand — as opposed to where the headlines suggest — is to look beneath the surface. That is precisely where Liz Ann Sonders and Collin Martin begin their first conversation together on Charles Schwab's On Investing podcast, and it is a distinction that carries significant weight.
With Sonders, Schwab's Chief Investment Strategist, now paired with Martin, who has assumed leadership of the firm's fixed income research and strategy team following Kathy Jones' retirement, the podcast enters what may be its most analytically potent configuration. Their debut conversation, recorded against the backdrop of a worsening geopolitical conflict, a Federal Reserve meeting, and a fixed income market sending contradictory signals, covers extraordinary ground.
The Illusion of Index Resilience
Sonders opens with a corrective that any serious investor should internalize. Asked about market resilience in the face of deteriorating geopolitical news, she qualifies the term almost immediately. "The market has, at the index level, been fairly resilient," she acknowledges — before making clear that the index level is not where the story is. "I think really where the action has been much more significant and maybe reflecting what's going on in the instability and uncertainty with regard to the war is below the surface of the indexes."
The numbers she cites are stark. The S&P 500's maximum year-to-date drawdown stood at just 5% — but the average member within the index had suffered a 16% maximum drawdown. The gap is more dramatic in the NASDAQ: "NASDAQ's had a little bit more of an index-level drawdown of 7% at its worst, year-to-date, but the average member has now had a -30% drawdown just year-to-date."
The culprit, in her analysis, is "the short-attention-span money that is just flying around in the market, not just by retail traders, but institutions like commodity trading advisors, CTAs for short, some of the systematic hedge fund community, the long/short hedge fund community." The war has added another variable: a "very, very strong inverse correlation" developing on an intraday basis between oil prices and the S&P 500 — a dynamic she sees persisting absent any conflict resolution.
Bonds Behaving Counterintuitively
If equity investors have had to recalibrate, fixed income investors have had to do the same — in an unexpected direction. Convention holds that geopolitical uncertainty drives a flight to safety, pushing Treasury yields down. That is not what happened.
"That hasn't happened," Martin says flatly. "We've seen most Treasury yields rise since this happened, mainly due to inflation and inflation expectations." The 10-year Treasury, which had slipped below 4% at the end of February, had climbed to approximately 4.3% by the time of recording — eroding the value of existing holdings in the process.
The mechanism is straightforward: "If inflation is expected to rise, if you're a fixed-income investor, you want to see higher yields to combat that inflation risk because you're locking in a fixed rate when you invest in a bond." But Martin raises a more consequential longer-term question: at what point does the market's focus shift from inflation to growth risk? "At some point, do we see a shift from, 'Hey, let's just focus on inflation,' to 'I'm actually worried about the negative consequences to the economy, to other risk assets.'" If that narrative flips, long-term yields could reverse course — but "we don't know right now," he says. "Very uncertain."
The Fed: Holding, Uncertain, and Saying So
The FOMC met in the days (March 18) before recording (March 20) and held rates steady, as expected. One dissent came from Stephen Miran in favor of a cut. The dot plot told a patient story: "7 committee members projected no rate cuts through the end of this year. And then another 7 projected just one. So you had 14 of the 19 dots projecting one cut or less."
More revealing was Powell's candor about the projections themselves. Martin notes that "Powell said if there was a meeting to skip the summary of economic projections, this would probably be it. And he kind of even said at one point, 'we just don't know.'" Economist Claudia Sahm, a prior podcast guest, made a similar observation publicly.
The political subplot around the Fed's leadership added texture. Powell's term as chair ends in May, with Kevin Warsh awaiting Senate confirmation as successor — a process complicated by a senatorial hold tied to a DOJ matter Powell's own department has deemed without merit. Martin offers useful structural clarity: the seat Warsh would occupy is not Powell's but Miran's. "The math for our outlook doesn't change much," he says. "It's just one potential dove, if that's the direction that Warsh wants to go in, replacing another dove" — with one vote among twelve, and a difficult consensus-building challenge ahead.
Meanwhile, Sonders flags a jarring intraday data point: a 9% market-implied probability of a rate hike at the April meeting — up from 0% the prior day. "It's a moving target," she says. "That kind of data changes literally every hour."
What to Watch
Both closed by naming their near-term priorities. Martin flags Fed speakers, now free to comment after the meeting's blackout period: "I think Powell does a good job of saying 'Here's what the committee is thinking in aggregate.' We'll be able to get a little bit more granular at the individual level." He also highlights the Fed's quarterly Z.1 report — the Financial Accounts of the United States — as a balance-sheet health check for corporate bond investors: "I can see, are we seeing an increase in liabilities relative to their assets. I can see what their aggregate cash holdings look like."
Sonders' watch-list spans housing data, productivity and unit labor costs ("AI's impact on a very important measure"), S&P Global PMIs, import-export prices given tariff concerns, and the University of Michigan consumer sentiment survey for its embedded inflation expectations readings.
The thread connecting all of it is a Fed that has admitted, in so many words, that its own forecasting tools are limited in this environment — and a market that is rotating violently beneath a deceptively calm surface. The index, as Sonders makes clear from the outset, is not the story.
Footnote:
1 Liz Ann Sonders, Collin Martin. "https://www.schwab.com/learn/story/inflation-oil-and-uncertainty-reading-markets-mixed-signals." Schwab Brokerage, 20 Mar. 2026.
