What is the key macro shift happening in markets right now?

Markets have flipped from expecting multiple Federal Reserve rate cuts to pricing in potential rate hikes in 2025. This shift is driven by rising inflation risks linked to energy prices and geopolitical tensions. It marks a sharp reversal in monetary policy expectations.

How likely are rate hikes based on current market data?

According to CME FedWatch pricing, there is now nearly a 30% chance that rates will end the year higher than the current 3.50%–3.75% range. Meanwhile, expectations for rate cuts have dropped to just 2.9%. This reflects a significant tightening bias.

Why are oil prices central to this market shift?

Brent crude has surged from around $70 to $111 per barrel due to Middle East tensions. Higher energy prices feed directly into inflation, making it harder for central banks to ease policy. This is the main driver behind the change in rate expectations.

What is happening to bond yields and why does it matter?

The U.S. 10-year Treasury yield has risen to about 4.40%, up from below 4% weeks earlier. Higher yields signal tighter financial conditions and increase borrowing costs. This typically pressures equities and other risk assets.

Why is gold falling despite geopolitical risk?

Gold has dropped roughly 20% even as geopolitical tensions rise. One key reason is that higher yields reduce the appeal of non-yielding assets like gold. The decline also follows a strong rally earlier in the year.

How are U.S. equities reacting to the current environment?

U.S. equities have weakened, with the Nasdaq falling more than 10% from its highs and entering correction territory. Rising yields and inflation concerns are weighing on valuations. Investor sentiment has turned more cautious.

How has Bitcoin (BTC) performed compared to other assets?

Bitcoin has remained relatively stable between $65,000 and $70,000, outperforming stocks and gold in the short term. However, over longer periods, it still underperforms both asset classes. This highlights mixed performance.

Is Bitcoin behaving like a hedge or a risk asset?

Bitcoin is currently behaving more like a risk asset than a hedge. Its price is influenced by liquidity and macro conditions rather than acting as a safe haven. This suggests strong correlation with broader markets.

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Fed rate outlook flips as oil drives inflation

Written by Brie CarterPublished Mar 30, 2026, 12:00 AMLast Updated Apr 26, 2026, 3:51 AM

Markets have rapidly shifted to pricing in potential interest rate hikes in 2026 as rising energy-driven inflation and geopolitical tensions reshape expectations for Federal Reserve policy.

Investors who recently anticipated multiple rate cuts are now assigning nearly a 30% probability that the fed funds rate will end the year above its current 3.50%–3.75% range, while expectations for lower rates have dropped to just 2.9%.

“Food and energy prices are tragically going to climb and remain high for a while, at least until the utter mess of Middle East shipping is sorted out,”

Said Crypto is Macro Now Newsletter.

The reversal in expectations has been driven by a sharp rise in Brent crude prices from around $70 to $111 per barrel since late February, pushing the US 10-year Treasury yield up to approximately 4.40%.

Despite geopolitical uncertainty, traditional safe havens have faltered, with gold falling about 20% and US equities entering correction territory, while Bitcoin has held relatively steady in the $65,000–$70,000 range.

However, over a longer timeframe Bitcoin continues to underperform, having declined roughly 50% from its October 2025 peak compared with strong prior gains in gold and equities.

The broader macro backdrop suggests sustained inflation pressures, with longer-term expectations remaining above the Federal Reserve’s target, reinforcing the market’s reassessment of monetary policy direction.

At the time of reporting, Bitcoin price was $67,123.98.