Markets Price Rate Hikes Amid Inflation, Geopolitics

Market expectations have dramatically shifted, moving from anticipating Federal Reserve rate cuts to pricing in potential rate hikes for 2026. This reversal is primarily driven by resurgent inflation fears, exacerbated by elevated oil prices stemming from Middle East tensions. While Bitcoin has shown short-term resilience, its longer-term performance lags behind traditional assets like gold and equities, which have also faced significant volatility. The sustained rise in energy costs and ongoing inflation above the Fed's target suggest a challenging economic outlook, potentially impacting GDP growth despite increased military spending.