Brent crude oil futures (BZ) plummeted 13% on Wednesday, registering the largest drop since 2020, after the U.S. and Iran agreed to a two-week ceasefire.
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Trade QQQ with leverageRate-cut odds have fallen significantly since the start of the conflict on February 28, but are now moving higher as fears of oil-driven inflation ease. While the Fed is widely expected to hold rates steady at the April 29 Federal Open Market Committee (FOMC) meeting, traders now assign higher odds of a rate cut at later meetings.
Rate Cut Odds Rise as Fed Highlights Risks to Dual Mandate
The odds of one 25 bps rate cut by year-end have nearly doubled from the prior day, rising to 25.2% from 13.6% on the CME FedWatch tool. However, they remain below levels seen a month ago when they stood at 32%. The odds of rates staying steady remain the most likely outcome with 71.6% odds, down from 80.9% a day ago.
Meanwhile, minutes from the Fed’s latest meeting showed that officials are concerned about both inflation and employment, with the war further complicating the interest rate path. Policymakers still project one rate cut in 2026, unchanged from their outlook in December.