[Bond traders begin betting on a 50 basis point rate cut by the Fed in September] According to Cailianshe, bond traders are increasing their bets that the Fed will cut interest rates by 50 basis points in September, rather than betting on a standard 25 basis point rate cut in September. This is fully reflected in the federal funds futures market.
The weaker-than-expected inflation data released on Thursday triggered a buying spree in October, and the momentum continued on Friday.
The contract expiring on October 31 has fully digested the expectation of policymakers to cut interest rates by 25 basis points at the September 18 meeting.
Any buying at higher price levels means that more people are expected to believe that the Fed may start the first easing cycle in many years with a "big move".
