Traders Unwind Long Treasury Bets as Smaller Rate Cuts Weighed
- Open interest in 10-year futures dropped most since Sept. 6
- Swaps market keeps pricing in lower odds of half-point cut
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Bond traders are beginning to cash out of their bets for a further rally in US Treasuries as they scale back on expectations the Federal Reserve will deliver another half-point interest-rate cut.
The unwind comes days ahead of the September jobs report which will provide the latest read on the health of the labor market. Fed Chair Jerome Powell on Monday said policymakers will lower rates “over time” as the US economy remains on solid footing. The remarks triggered the biggest open interest drop since Sept. 6 in 10-year note futures, and yields for that tenor climbed 3 basis points on the day in a signal of traders taking off some long positions.