Stocks and bonds struggle as traders see chances of Fed rate hike soar above 50% — up sharply from earlier this week

Higher oil prices driven by the U.S.-Israeli war in Iran are eroding prospects for a Federal Reserve rate cut this year and increasing the odds of a rate hike instead. That development puts upside pressure on inflation and Treasury yields, is negative for rate-sensitive equities and bonds, and is supportive for energy-sector assets.

Analysis

Higher oil prices driven by the U.S.-Israeli war in Iran are eroding prospects for a Federal Reserve rate cut this year and increasing the odds of a rate hike instead. That development puts upside pressure on inflation and Treasury yields, is negative for rate-sensitive equities and bonds, and is supportive for energy-sector assets.