Bond Traders Ditch Inflation Bets as Oil Surge Threatens Growth

US bond traders are abandoning bets on rising inflation to focus on a potential hit to economic growth from elevated oil prices.

With the Iran war pushing crude to multiyear highs, market participants have scrambled to reverse their positioning. Early last week, futures were pricing in an interest-rate hike by year-end as a sure thing. Now, rate swaps reflect around six points of cuts by the end of 2026, equivalent to about 25% odds.