【On the eve of the Jackson Hole meeting, traders bet on aggressive rate cuts by the Federal Reserve】According to Golden Finance, traders are flocking into a specific options bet, believing that the Federal Reserve will significantly cut rates by more than 25 basis points next month. Since the beginning of this month, there has been strong demand for overnight secured financing rate (SOFR) positions closely related to policy expectations. This week, traders have further increased their bets, with open contracts targeting a 50 basis point rate cut rising sharply. A few days later, Federal Reserve Chairman Powell will deliver a key speech at Jackson Hole. Previously, inflation data released in the U.S. exceeded expectations, leading some traders to lower their rate cut expectations. Although there has been a pullback in the short term, traders still seem to firmly believe that a rate cut will occur next month. On Tuesday, U.S. Treasury bonds ended three consecutive days of selling, with yields on bonds of all maturities falling. Ian Lingen, head of U.S. interest rate strategy at BMO Capital Markets, stated, "As the market prepares for Powell's speech, the biggest risk facing U.S. Treasuries is that the Federal Reserve Chairman chooses to dampen widely held expectations for a September rate cut."
