Oil Rally Triggers Repricing of Fed Rate Path Across Markets
TL;DR Summary
A surge in oil prices is lifting inflation expectations and pushing markets to rethink the Fed’s rate-cut outlook. Futures now price in at most one rate cut in 2026 (with alignment to the Fed’s prior projections) and expect fewer cuts in 2027 as breakeven inflation rises and SOFR spreads tighten. If oil stays elevated, the narrative could shift from cutting rates to potential hikes to contain inflation.
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