The Federal Reserve held rates at 3.5%-3.75% last week amid inflation concerns and Middle East tensions, yet traders are now betting on a dramatic policy reversal. Markets for rates "Above 0.75%" collapsed from 97¢ to 12¢, while "Above 0.25%" and "Above 0.00%" markets similarly cratered to under 20¢. This suggests traders believe economic conditions will deteriorate so severely that the Fed will need to cut rates to near zero by April 2027. The shift is remarkable given the Fed's recent projection of only one rate cut in 2026 and concerns about oil price shocks from the Iran conflict. Either traders see a major recession ahead, or they're betting the geopolitical crisis will resolve quickly, allowing aggressive easing to combat economic weakness.