Investors see a potential rate hike from the Fed amid growing inflation fears

US consumer confidence took a noticeable hit in March, as rising tensions in the Middle East began to worry households about higher prices and a weaker economy.

The University of Michigan Surveys of Consumers said its index fell to 53.3, a three-month low and below expectations.

The decline was broad, hitting all age and income groups, with sharper drops among wealthier households and stock investors. 

Meanwhile, rapidly reversing course from a month ago, when traders anticipated a rate cut, investors see a potential Fed rate hike amid growing inflation fears and rising oil prices due to the Iran war.

According to CNBC, which looked at the CME Group FedWatch tool, futures market traders now put the odds of a rate hike by the end of 2026 at 52%.