Oil at $100 boosts odds of Fed rate hike in September

The sharp rise in oil prices linked to the U.S.-Iran conflict has dramatically shifted market expectations for Federal Reserve policy. Interest rate swap traders have significantly increased bets on a September rate hike as inflation risks move back to the forefront of investors' concerns. Historically, elevated energy prices feed through to broader inflation via supply chains and transportation costs, leaving the Fed with little room to stay on hold. Labor market data added to the hawkish case, with jobless claims remaining low and signaling a still-heated economy. Should oil stay above $100, the Fed may feel compelled to raise rates even at the risk of slowing growth.