Fed shifts hawkish tone

The Fed’s Summary of Economic Projections showed a median federal‑funds rate of 3.4% at the end of 2026, signaling policymakers still see roughly one 25‑basis‑point cut this year even as uncertainty has grown. (marketwatch.com) Chair Jerome Powell told reporters the Committee needs to “see progress” on disinflation — particularly in goods and producer prices — before officials will lower the policy rate. (federalreserve.gov) Bond traders responded by scrapping large parts of their 2026 easing bets, a shift market strategists tied to surging oil after the Middle East conflict and hotter-than-expected producer inflation. (bloomberg.com) Short‑end Treasury yields jumped: the 2‑year note rose to about 3.775% and the 10‑year to roughly 4.265% on March 18, narrowing the 2s‑10s gap to near a 49‑basis‑point spread that traders described as a bear‑flattening. (cnbc.com) Market‑implied pricing shifted sharply — CME FedWatch showed a roughly 96% probability of a March hold and only about a 4% chance of a 25bp cut in that meeting, while Atlanta Fed trackers put the near‑term odds of a hike above the odds of a cut. (phemex.com) Secondary markets and swaps desks reported traders “erasing” 2026 cut expectations over the past week, a repricing that analysts warn pushes the neutral‑rate conversation toward a higher, longer horizon. (financialcontent.com)