Wow! The Probability of an Interest Rate Hike in 2026 Has Soared Over the Past Week.

U.S. inflation jumped to a 4.2% three-year high in May, causing the CME FedWatch Tool to show a 71% probability of an interest rate hike by December 2026, up from below 50% just days earlier. New Fed Chair Kevin Warsh's historically hawkish stance makes rate hikes more likely, which could pressure expensive stock valuations and force businesses to cut back on AI infrastructure spending.