The bond market is now pricing a 12% probability of a Federal Reserve rate hike by year-end, compared to just a 5% chance of a cut. This marks a significant shift driven by persistent inflation from geopolitical tensions and rising energy costs.
On Polymarket, the odds of a rate decrease at the April meeting sit at 0.1%. The market shows near-total disbelief in any near-term easing, even after the Fed held rates steady between 3.50% and 3.75%.
Core inflation is running near 3% year-over-year, energy prices are spiking, and traders are now pricing in the possibility the Fed may need to tighten policy. The market leans toward zero cuts in 2026 at 46%, signaling the Fed is more likely to hold than ease.
The key catalysts ahead: Fed Chair Powell’s statements and upcoming inflation reports. Any dovish rhetoric or softening data could move the odds quickly.