Wager for Half-Point Rate Reduction Faces Test of Powell Remarks

Traders are piling into one specific options wager that relies on a dovish Federal Reserve slashing interest rates by over a quarter-point next month.

The intensifying bet comes days ahead of the central bank’s annual gathering in Jackson Hole, Wyoming, where Fed Chair Jerome Powell is set to deliver pivotal remarks that could validate or nullify investors’ expectations for monetary easing. It also follows a hotter-than-expected read on inflation that caused some traders to dial back their rate-cut expectations.