Rising oil prices and intensifying geopolitical tensions are reigniting inflation concerns, while traditional safe-haven assets show signs of strain.
Just weeks ago, market participants were focused on how many rate cuts the Federal Reserve might deliver in 2026. Now, that narrative is shifting. With the U.S. economy displaying only modest signs of slowing, inflation still running above the Fed’s 2% target, and oil prices surging 50% in just three weeks, traders are beginning to price in the possibility of a rate hike as early as April.
Data from CME FedWatch shows the probability of a policy tightening at the Fed’s April meeting has climbed to 12%, up from 0% just a week ago. This marks a sharp reversal from expectations two months ago, when a rate cut during that same period was widely anticipated.
February inflation data showed headline CPI at 2.4% annually, with core inflation at 2.5%—both recorded before the escalation of the Iran conflict and the subsequent spike in oil prices.
Meanwhile, bond markets are under pressure. The U.S. 10-year Treasury yield rose another 10 basis points on Friday to 4.38%, compared to below 4% at the beginning of March. The sell-off is not limited to the U.S.; in the U.K., 10-year gilt yields have surged above 5%, rising 15% over the past month to their highest levels since 2008.
Equities have so far avoided sharp moves, but weakness is building. The S&P 500 fell 0.9% on Friday, putting it on track for a fourth consecutive weekly decline and leaving it down more than 5% since late February. The Nasdaq has followed a similar trajectory, dropping 1.2% on the day.
Precious metals, which rallied strongly in the lead-up to the conflict, have reversed course. Gold has dropped from around $5,500 per ounce at the start of the month to $4,569, while silver has fallen sharply from $95 to $69.50 per ounce.
Against this backdrop, some analysts suggest Bitcoin may be signaling broader macro stress ahead. Andre Dragosch, European Head of Research at Bitwise, noted that Bitcoin appears to be “acting as the canary in the macro coal mine,” adding that at current levels, the asset is already pricing in a recession even as traditional markets lag.
Bitcoin continues to trade near $70,000 and, despite modest gains since early March, remains among the strongest-performing assets since the onset of the conflict.
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