In March 2026, the global financial markets witnessed a sharp reversal in expectations regarding monetary policy. Just a few weeks prior, the market generally anticipated that the Federal Reserve would continue its rate-cutting cycle throughout the year. However, now the CME "FedWatch" tool shows that the probability of the Fed holding interest rates steady in April has already reached 97.9%, and maintaining the current rate has become the dominant consensus. Moreover, the market has begun to price in rate hikes in 2026: swap data indicates that traders have already priced in approximately a 20 basis point increase, and the yield on 2-year U.S. Treasury bonds at one point exceeded 4%.

This shift is not an isolated event. Its structural significance lies in the following: the ongoing cycle of rate cuts that began in September 2024, after operating for about 18 months, faces the risk of actually ending. Although the Fed's dot plot still indicates a target of one rate cut within the year, the rhetoric of officials has noticeably shifted: including several policymakers previously considered dovish, such as Chicago Fed President Goolsbee, who have begun publicly discussing the possibility of rate hikes. This means that the macroeconomic narrative is shifting from "a contest over the timing and pace of rate cuts" to a deeper restructuring of the issue.