Wow! The Probability of an Interest Rate Hike in 2026 Has Soared Over the Past Week.

The article argues that the odds of a Federal Reserve rate hike before the end of 2026 have risen sharply, driven by hotter U.S. inflation data and a stronger-than-expected labor market. It cites CME FedWatch showing the probability of a hike climbing from below 50% before the June 5 jobs report to above 71% by June 10 after May CPI rose to a three-year high of 4.2%. The piece says the backdrop is bearish for a richly valued stock market, especially growth and AI-related spending, because higher rates could pressure borrowing costs and curb corporate investment. It also highlights new Fed Chair Kevin Warsh’s historically hawkish stance as an additional reason rate hikes look more likely.