Traders dramatically reversed course on Federal Reserve expectations yesterday, with markets pushing the probability of a rate increase by the end of 2026 to 52% on Friday morning, the first time it has crossed the 50% threshold. The pivot appears across multiple Fed rate markets for April 2027, where odds for rates above 0.25% spiked to 90¢ from 19¢, and above 1.25% jumped to 80¢ from 18¢. This represents a stunning reversal from the Fed's March meeting, where seven committee members have dots suggesting no cuts this year but few expected outright hikes. The shift reflects mounting concerns over global benchmark crude prices topping $110 amid the ongoing Iran conflict, combined with officials now expect[ing] the personal consumption expenditures price index to reflect a 2.7% inflation rate. The market is pricing in a scenario where persistent inflation forces the Fed's hand toward tightening, even as the chances for both elevated inflation and an economic pullback place the Fed's dual goals of low inflation and full employment further into tension.