The market begins to reprice rate hike expectations as inflation concerns and geopolitics reshape the Federal Reserve’s path.

Jinse Finance reported that on March 29, describing the recent market shift in expectations for central bank monetary policy as a '180-degree turn' seems insufficient. Just a few weeks ago, the market was anticipating the Federal Reserve would make multiple rate cuts by 2026, but now it is clearly beginning to price in the possibility of a rate hike this year. The latest data from the CME FedWatch Tool shows that the probability of the federal funds rate being higher than the current 3.50%-3.75% range by the end of this year is close to 30%, while the probability of a rate decrease has dropped to 2.9%. This shift in expectations is primarily driven by inflation concerns stemming from the energy market. Since the escalation of the Middle East situation at the end of February, Brent crude oil prices have risen from around $70 per barrel to the current level of about $111. At the same time, long-term U.S. Treasury yields have significantly increased, with the 10-year Treasury yield climbing from less than 4% a few weeks ago to about 4.40%. The 'Crypto is Macro Now' newsletter noted: "Food and energy prices will unfortunately continue to rise and remain high for some time, at least until the chaos in Middle Eastern shipping is resolved. Even if a peace agreement is reached tomorrow (which is unlikely), it will take at least several months for relief."