The Fed funds rate markets are pricing in a dramatically hawkish future, with the current rate held at 3.5-3.75% after the March meeting. Markets are now pricing just 18¢ for rates above 1.50% after April 2027, down from 86¢ — a massive 68¢ plunge that signals traders expect deep cuts ahead. But they're also betting on higher intermediate rates, with above 2.25% trading at 93¢, up 22¢. This reflects the Fed's projection of only one rate cut in 2026 due to the Iran war's energy price shock. The market is now pricing in a scenario where the Fed cuts aggressively in the long term but holds rates higher for longer in 2026-2027 than previously expected.