According to BlockBeats, on September 11, traders in the U.S. interest rate options market are still betting that the Federal Reserve will make at least one super-large interest rate cut this year, but it may not happen before the U.S. presidential election on November 5.
Recent activity in options tied to the secured overnight funding rate suggests traders are increasingly positioning for a rate cut of about 150 basis points ahead of the Fed’s Jan. 29 policy decision. That’s the same dynamic that’s playing out in the swaps market right now.
To achieve this, policymakers would have to implement at least half a percentage point cuts at two of the four meetings before January, without cutting rates between meetings.
