Middle East conflict disrupts oil flows, inflation risks rise

US jobless claims and manufacturing data came out on April 23, 2026, while the Middle East conflict continues to disrupt global oil flows. The probability of a Fed rate cut after the June 2026 meeting sits at 4.1% YES, steady from yesterday but down from 5% a week ago.

Market reaction

The data release coincides with a collapsed temporary ceasefire and a US naval blockade of the Strait of Hormuz. Oil prices have pushed above $118 per barrel, raising inflation risks and weighing on Fed rate cut expectations. The Fed decision in June 2026 market stays flat at 4.1% YES, with traders skeptical about a cut while inflation pressure builds.

Why it matters

Sub-markets for Fed decisions from March to June also point to a cautious stance, with geopolitical tensions likely pushing the Fed to prioritize inflation control over rate cuts. Elevated oil prices and the ongoing conflict are the main factors holding these odds down. The lack of movement in the odds shows traders still absorbing the latest economic data alongside the geopolitical situation.

What to watch

The June rate cut market trades a face value of $26,382 daily, with actual USDC volume at $1,200. It takes $2,864 to move the odds by 5 percentage points, meaning the market is thin and vulnerable to large trades. The biggest price movement in the last 24 hours was just 0.1 points, showing limited conviction.

A YES share at 4.1¢ would pay 24.4x if the Fed cuts, but that bet requires a belief in significant geopolitical de-escalation or a major shift in inflation data. Watch for signals from the upcoming FOMC meeting and any statements from Jerome Powell that might hint at a policy change. Developments in the Middle East conflict and their effect on global oil prices will directly shape these odds.

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