“Ruh roh.”

On Friday, for the first time this year, traders fully priced one 25bps rate hike from the Fed in 2026.

Even if this proves fleeting, it’s a milestone of sorts. Recall that just prior to Donald Trump’s decision to green-light the Israeli airstrike that killed Ali Khamenei, market pricing reflected expectations for at least two cuts across Kevin Warsh’s first five meetings in the big seat.

The familiar figure, updated for Friday, shows you the about-face — the extent to which the read-across of history’s most acute energy supply shock forced a wholesale rethink of the Fed trajectory.

The escalation in rate hike bets was triggered by Chris Waller, who’s supposed to be one of Trump’s beholden votes on the Fed board. Inflation in America is “not headed in the right direction,” Waller told an audience in Germany on Friday.

Although he didn’t join Hammack, Kashkari and Logan in dissenting in favor of tweaking the forward guidance in the April FOMC statement, Waller indicated Friday that he wasn’t against the idea.

“I would support removing the easing bias language in our policy statement to make it clear that a rate cut is no more likely in the future than a rate increase,” he said, in the same speech.

The timing left something to be desired. Hours later, Donald Trump attended a swearing in ceremony for Warsh. “I want him to be totally independent,” Trump said. “Don’t look at me,” he told Warsh. “Don’t look at anybody. Just do your own thing and do a great job.”