Options Traders Abandon Fed Rate-Cut Bets on Tariff Optimism
Containers are loaded onto trucks at the Port of Houston in Seabrook, Texas.
Photographer: Mark Felix/BloombergTraders are rushing out of bets that call for Federal Reserve interest-rate cuts as the US-China trade war cools and the latest read on inflation reveals subdued tariff impact.
Recent activity in rate options show the unwinds came immediately after a temporary truce between the two countries on tariffs, then extended Tuesday following data showing consumer prices rose less than forecast in April. Easing tariff pressures are likely to alleviate concerns of slowing US growth and relieve the central bank from having to cut rates to spur the economy. President Donald Trump’s announcement that Saudi Arabia would invest $1 trillion in the US also fueled risk-on sentiment, wiping out Treasury market gains.