April 2nd, 2026
Federal funds futures are currently pricing no change in the Federal Funds rate through 2026, although the underlying bias has shifted toward potential tightening in response to the unfolding energy price shock. As a result, the macroeconomic regime may be transitioning toward an inflationary shock, which would be bearish for equity markets.
The VIX Index, currently in the mid‑20s, supports the possibility of a regime change. However, markets continue to interpret recent volatility as a temporary liquidity shock, largely because 10‑year Treasury yields continue to price well‑anchored long‑term inflation expectations.
