Treasury options traders prepare for potential US Fed rate hikes instead of cuts amid unexpectedly strong inflation.
Treasury options traders prepare for various monetary policy scenarios, covering both rate hikes and cuts ahead of the US Federal Reserve meeting. Recent inflation data has remained stronger than expected, reducing the likelihood of rate cuts. The positioning includes hedges targeting a policy rate as low as 3% by December FOMC, in contrast to the 5% currently priced into the swaps market.
April 29, 2024
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