🇺🇸 Powell will give a speech this Friday evening, some traders lower rate cut expectations

Federal Reserve Chairman Powell will deliver a key speech this Friday evening Beijing time at the annual gathering in Wyoming. Meanwhile, the latest inflation data, which has exceeded expectations, has prompted some traders to lower their rate cut expectations while still maintaining their view of a rate cut next month.

Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, stated in a research report, "As the market prepares for Powell's speech in Jackson Hole, the biggest risk facing U.S. Treasuries is that the Fed Chairman may pour cold water on the market's general expectation of a rate cut in September."

Currently, approximately 325,000 options positions (costing about $10 million) could yield a profit of up to $100 million if the Federal Reserve cuts rates by 50 basis points at the September policy meeting. Additionally, current market pricing indicates that the probability of a 25 basis point rate cut at the meeting on September 16-17 is about 80%.