Bets on Fed Rate Cuts Are Sweeping Through US Bond Market
Television stations broadcast Jerome Powell, chairman of the US Federal Reserve, speaking after a Federal Open Market Committee (FOMC) meeting on the floor of the New York Stock Exchange.
Photographer: Michael Nagle/BloombergBond traders are ramping up bets on the Federal Reserve cutting interest rates this year, as signs of a weakening US economy bolster the case for the central bank to reduce borrowing costs as demanded by President Donald Trump.
Positioning in options tied to the Secured Overnight Financing Rate, which closely tracks the expected trajectory of US monetary policy, shows investors readying for the possibility of cuts in each of the three remaining meetings this year, bringing down rates by a total of 75 basis points in 2025. Other plays on SOFR have included bets on a 50 basis-point cut at the central bank’s next meeting, in September.