Oil and bond yields are the story of the week, and published research is converging on an uncomfortable conclusion: the Fed's next move may be a hike, not a cut.
Researchers broadly argue that ongoing Strait of Hormuz disruption is keeping Brent near or above $110/bbl, pushing US headline CPI back toward 3.8% YoY and lifting 30-year Treasury yields above 5.1% — levels not seen since before the financial crisis. Market pricing now implies a 70–80% chance of a Fed hike by end-2026, according to the consensus read.
Emerging markets are already responding: analysts highlight Bangkok Indonesia's surprise 50bp hike as the clearest policy reaction, while planned cuts in Turkey, Brazil and Romania have been shelved. One camp of analysts also points to accelerating Treasury sales by Japan and China as amplifying the bond selloff beyond geopolitics alone.
Not everyone agrees on the endpoint. A contrarian thread suggests structural AI-driven disinflation is still intact under the noise, leaving room for cuts if a Middle East de-escalation arrives. Key catalysts ahead: FOMC minutes, the 20-year Treasury auction, and the BOJ's June meeting — now ~80% priced for a hike.