BlockBeats reported that on August 13, for several weeks, investors have been continuously pouring into swap contracts, options, and directly betting on U.S. Treasury bonds, speculating that slowing inflation will allow the Federal Reserve to lower borrowing costs in the coming months. This view was initially validated on Tuesday: after the release of July's inflation data, short-term U.S. Treasury yields fell sharply, while swap contract traders raised the probability of a rate cut in September to 90%.
More notably, market bets on the Federal Reserve cutting rates by more than 25 basis points in September are also heating up. Traders added about $2 million in premiums to positions related to the secured overnight financing rate (SOFR) that would profit from a larger-than-expected rate cut.
Today's (Tuesday) inflation data, while slightly stronger than in previous months, is still far below the level of concern for many," said Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock, in a research report. "Therefore, we expect the Federal Reserve to initiate interest rate cuts in September, and there is even reasonable grounds for a 50 basis point cut."
In addition, Goldman Sachs' trading and research team previously stated that the market is underestimating the possibility of a 50 basis point rate cut by the Federal Reserve in September. (Jin Shi)