What is UBS's view on the likelihood and timing of the next Federal Reserve interest rate move following the US-Iran deal?

UBS, through Leslie Falconio, expects the Fed to maintain its current rates through 2026 — effectively holding — and deliver its next policy move as a rate cut in early 2027, likely in the first or second quarter. Although the FOMC is expected to remove its easing bias at its upcoming meeting — signaling a more hawkish tone — Falconio emphasized that the next actual action will be a cut, not a hike, as policymakers wait for incoming data on growth and the labor market.

How did the US-Iran deal affect oil prices, Treasury yields, and market expectations for a December 2026 Fed hike?

Following the US-Iran deal to reopen the Strait of Hormuz, oil prices tumbled to a three-month low, easing inflationary pressure and causing a rally in Treasuries — especially at the short end of the curve. As a result, market pricing for a December 2026 rate hike dropped from nearly 100% to about 74%, and two-year yields declined as traders removed those hikes from their expectations.

UBS Sees Fed Rate Hike Pressure Ease as Oil Prices Drop Following US-Iran Deal

Jun 15, 2026

UBS analyst Leslie Falconio reports Federal Reserve rate hike pressure is easing after a US-Iran deal lowered oil prices via the Strait of Hormuz. She expects the next policy move to be a rate cut in 2027 despite potential near-term hawkish shifts.

bloomberg

2026-06-15

UBS Sees Fed Rate Hike Pressure Ease as Oil Prices Drop Following US-Iran Deal

UBS Sees Fed Rate Hike Pressure Ease as Oil Prices Drop Following US-Iran Deal

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