"Markets are seeing risk-off moves amid higher energy prices and inflationary risks. Pricing for central bank hikes is moving further in that direction, significantly impacting all asset classes, including equities."
"Traders have cancelled nearly all their bets that the U.S. Federal Reserve could cut interest rates this year. Some even think the Fed could raise rates in 2026, a scenario that was nearly unthinkable before the war began."
"Before the war, traders were betting heavily that the Fed would cut rates at least twice this year. But lower rates risk worsening inflation, leaving little room for central banks worldwide to cut rates."
Canadian and U.S. stock markets experienced significant declines amid fears regarding the U.S.-Iran war's effects on interest rates. Higher energy prices and inflationary risks prompted a risk-off sentiment among investors. The S&P/TSX composite index dropped 537.57 points, while the Dow Jones industrial average fell by 443.96 points. Traders have largely abandoned bets on interest rate cuts by the U.S. Federal Reserve this year, with some speculating on potential rate hikes in 2026. Central banks globally are maintaining steady interest rates, limiting options for economic support.
Read at www.cbc.ca
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