Odaily Planet Daily News: Traders in the U.S. interest rate options market are accepting an emerging bet related to the Fed's interest rate trend: there will be up to 300 basis points of interest rate cuts in the next nine months (12 interest rate cuts calculated at the conventional 25BP range). In the past three trading days, positions in the options market related to the secured overnight financing rate show that these bets will benefit if the Fed cuts interest rates to a low of 2.25% in the first quarter of 2025. Unless the U.S. economy suddenly falls into a recession, this outcome seems unlikely. This is an aggressive bet considering that the market expects the Fed to cut interest rates by about 75 basis points during this period. Fed officials recently predicted that interest rates would be cut by only 25 basis points by the end of this year and a total of 125 basis points by the end of 2025. Now, some people are also starting to increase their bets to hedge the consequences of tail risks, such as rapid and extreme interest rate cuts. (Jinshi)
