Traders Make Late Dash Into Bets Fed Stays Higher for Longer
- Demand shifts to hawkish protection in lead-up to Fed meeting
- Amount of Fed cuts priced in for next year continues to erode
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Options traders are seeking protection from higher interest rates ahead of Wednesday’s Federal Reserve policy decision.
That’s a change from the norm over the past couple of weeks, during which traders broadly favored hedging for a pivot to rate cuts by mid-2024. The shift in momentum has a backdrop of erosion in the amount of easing priced in for next year and subscription to the idea that the Fed will raise rates once more this year in November or December and keep them elevated indefinitely.