Interest Rates & Indices

Interest rate markets have sharply reversed course, with only 0.2% of traders now expecting Fed rates to fall to 3.25-3.5% by end-2026, down from December projections of two cuts. The shift comes as ECB officials warn they cannot rule out April rate changes if oil prices remain elevated, with crude up 3% on Middle East tensions.

Multiple Federal Reserve regional presidents are signaling reluctance to cut rates further, citing tariff-driven inflation and strong economic growth. The shift toward a prolonged higher-for-longer stance is pressuring equity valuations while keeping 10-year Treasury yields elevated. Traders are repricing rate cut expectations for 2026.