Bond Traders Scale Back 2026 Fed Rate Cut Bets on Oil, PPI

Bond traders see it even less likely that the Federal Reserve will cut interest rates this year as Middle East warfare put upward pressure on oil prices and a US inflation gauge rose more than expected.

Markets further downgraded the chances of a rate cut as oil benchmarks approached their highest closing levels since 2022, spurred by reports an Iranian field was impaired by the latest attacks on the region by the US and Israel. Oil prices contribute to US consumer inflation in the short term via retail gasoline, where the national average is up about 30% this month.