The big recent development in markets has been traders flirting with the possibility of a much earlier than expected interest rate increase from the US Federal Reserve at its next meeting at the end of this month, or in September. This could be a game changer globally for all asset prices.Prior to last week’s June inflation data, the probability of a July rate rise from the Fed was priced as an even bet, given a growing sense that its new chair, Kevin Warsh, might be a closet “hawk”. Following the soft June print, that was slashed to around a one-in-10 prospect.Subscribe to gift this articleGift 5 articles to anyone you choose each month when you subscribe.Subscribe nowAlready a subscriber? Fetching latest articles
Unprecedented tech inflation will drive rates higher
AI is driving the biggest capex boom in 235 years, creating a world where we see the Fed spin 180 degrees and raise rates twice in the coming months.
TL;DRAI
Traders repriced July rate-hike odds from 50% to ~10% after soft June inflation, betting on Fed increases by end-of-month or September. Higher rates sooner squeeze startup funding and SaaS multiples—forcing tech leaders to reset 2026-2027 M&A and hiring budgets.
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