Big Bets in Asia on Fed Have Traders Guessing Who’s Paying
- Structures appear to wager on just one more Fed rate cut
- Liquidity for block trades is better during U.S. trading hours
Photographer: Dario Pignatelli/Bloomberg
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The eurodollar options market, where investors bet on U.S. interest rates, is typically quiet during Asian trading hours. The lack of liquidity hasn’t stopped the building of huge positions in recent weeks.
A series of block trades, similar in size and structure, has led to speculation that at least one investor is betting big that the Federal Reserve will cut rates only once more, at most, in this cycle. The hedge for just one transaction last week was equivalent to more than four times the average daily volume for September contracts in the region.