Bond Traders Boldly Bet on 300 Basis Points of Fed Cuts by March
- Standout play in options targets policy rate as low as 2.25%
- Fed officials forecast just one quarter-point cut this year
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Traders in the US rates options market are embracing a nascent wager on the Federal Reserve’s interest-rate path: a whopping 3 percentage points worth of cuts in the next nine months.
Over the past three sessions, positioning in the options market linked to the Secured Overnight Financing Rate shows an increase in bets that stand to benefit if the central bank reduces its key rate to as low as 2.25% by the first quarter of 2025.