The Rate Guy No, The Fed Wont Hike Because of Oil
Mar 15, 2026
They break down oil’s wild price swings and why sudden commodity moves matter for recession risk. They discuss the historical link between rising oil and interest rates. They explain why central bankers focus on core inflation that strips out volatile commodities. They cover market volatility in rates and options and a recent court ruling affecting Fed leadership.
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Oil Spike Shows Commodity Volatility
- Oil spiked to $125 then swung back to $85–$100, showing extreme commodity volatility amid the Iran conflict.
- JP Conklin links historical recessions to simultaneous rises in oil and rates, warning oil alone won't dictate recession risk.
10-Year Yield Could Amplify Oil Shock
- Long-term yields (10-year) have weaker correlation with oil than Fed funds, but could still trigger recession if paired with an oil surge.
- JP asks whether a 10-year at 5% plus oil spike could replace Fed hikes as the recession trigger.
Don't Expect Fed Hikes Over Oil Spike
- Do not expect the Fed to hike solely because oil-driven inflation rises; core PCE strips volatile commodities like oil.
- JP explains the Fed focuses on underlying demand and avoids reacting to supply shocks they can't fix.