US credit markets are the most hawkish they’ve been in the last 2 years, pricing in one and probably two 0.25% rate hikes by Christmas – not that long since their last rate cut by 0.25% in Dec’25, the final move in an aggressive 1.75% easing cycle. Markets have increased rate hike expectations this month following hawkish Fed signals, renewed inflation concerns from higher oil prices, and rising long-term bond yields as heavy government borrowing increased. A cooler-than-anticipated inflation print (CPI) earlier in the month helped, but the oil price quickly became the overriding factor.
