Traders were certain of rate cuts this year - until they weren't. What happened?

• Traders have re-evaluated 2026 rate cut bets for major central banks, shifting from expectations of cuts to potential hikes due to inflation fears.
• Money markets now indicate a higher probability of ECB and Bank of England rate hikes by year-end, a complete U-turn from earlier forecasts.
• Bond yields, including British, German, and U.S. 2-year instruments, have surged in March, reflecting market concerns over inflation and central bank policy.
• Experts suggest that central banks, particularly in the UK and Europe, cannot fully 'look through' current energy price sensitivities due to their direct impact on consumer inflation, making this period different from past oil shocks.

The video highlights a significant shift in financial market expectations, with traders re-evaluating central bank rate cut bets to now price in potential hikes. This reversal is primarily driven by fears of higher inflation, exacerbated by geopolitical events and surging oil prices. Bond yields have surged globally, reflecting these changed monetary policy outlooks.