Traders Lift July Fed Hike Odds to 50% as Oil Climbs and US Strikes Iran
Updated
Updated · Bloomberg · Jul 13
Traders Lift July Fed Hike Odds to 50% as Oil Climbs and US Strikes Iran
3 articles · Updated · Bloomberg · Jul 13
Summary
Money markets on Monday priced a July quarter-point Fed hike at nearly 50%, up from less than 40% earlier in the session.
Oil prices rose after fresh US strikes on Iran, while Fed Governor Christopher Waller said rates may need to rise if underlying inflation keeps showing broad price pressures.
The shift pushed the two-year Treasury yield to a 16-month high, underscoring how quickly traders repriced near-term policy expectations.
The move extends a broader run-up in July hike bets as investors weigh energy-driven inflation risks alongside increasingly hawkish Fed signals.
With oil prices soaring and AI driving up costs, can the Fed tame inflation without crashing the economy?
How is a naval blockade in the Strait of Hormuz forcing the Federal Reserve to reconsider US interest rates?
U.S. Inflation Nears 4%: Fed Signals Rate Hikes as Middle East Conflict Drives Energy Crisis
Overview
As of July 2026, the United States economy faces persistent inflation and rising uncertainty, largely driven by ongoing conflict in the Middle East. Despite a robust job market and steady economic growth, inflation is outpacing wage gains, putting pressure on households. This has led to a significant shift in Federal Reserve policy expectations, with markets now anticipating possible interest rate hikes instead of cuts. The Fed’s main challenge is to bring inflation back to its 2% target while navigating global instability and energy disruptions, making its future decisions highly dependent on evolving economic and geopolitical conditions.