Contrarian Bet Emerges That Next Fed Move Is Higher, Not Lower
- Money-market options prices imply about a 25% chance of a hike
- Rate-hike bets emerged after a hot December jobs report
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It’s at best, a longshot, but one that’s emerged among a group of die-hard bond traders — that the Federal Reserve’s next move on interest rates will be up, not down.
The wager, which arose after a blowout jobs report on Jan. 10, stands in stark contrast to the consensus on Wall Street for at least one rate cut this year. That contrarian bet has remained in place even after a benign inflation report on Wednesday strengthened the Fed’s rate-cutting stance and caused yields in the US Treasury market to retreat from multi-year highs.