Market bets on Fed rate hike increase 

Debate is intensifying in Wall Street over the path of US monetary policy, as the possibility of interest rate hikes has resurfaced. This shift is driven by rising oil prices amid escalating tensions in the Middle East and potential supply disruptions through the Strait of Hormuz.

The surge in energy prices, alongside the ongoing conflict in the region, has heightened concerns about renewed inflationary pressures. This could push the Federal Reserve to reconsider its policy path, after expectations had previously leaned toward holding or cutting interest rates.

According to the CME FedWatch Tool, the probability of the Federal Reserve raising interest rates has risen to over 20% this year, amid fears that a potential closure of the Strait of Hormuz could disrupt global energy supply chains, thereby increasing prices for goods and services.