According to ChainCatcher, bond traders are increasing their bets that the Federal Reserve will cut interest rates by 50 basis points in September, rather than the standard 25 basis points. Marilyn Watson, head of global fundamental fixed income strategy at BlackRock, said the Fed is likely to cut interest rates in September. But she also believes that the Fed may start taking action in July.
CME Group Inc. futures open interest data showed buying volume on Thursday approaching 260,000 contracts, a record for October contracts. Buying interest remained high on Friday. Higher-priced buying means more people believe the Federal Reserve may start its first easing cycle in recent years with an outsized move.
Last week, Fed officials were seen as sending their strongest signal yet of a rate cut. In public appearances last week, including two congressional hearings by Fed Chairman Jerome Powell, officials expressed new confidence in their control over inflation and whether they were ready to begin a policy shift. Pimco economist Tiffany Wilding said that after last week's data, a rate cut in September was "a done deal."