According to Odaily, traders in the U.S. interest rate options market are still betting on at least one significant rate cut by the Federal Reserve this year. However, it is unlikely to occur before the U.S. presidential election on November 5. Recent options activity related to the Secured Overnight Financing Rate (SOFR) indicates that traders are increasingly positioning for a rate cut of approximately 150 basis points before the Fed's policy decision on January 29. This aligns with the current situation in the swaps market.
To achieve this without an inter-meeting rate cut, policymakers would need to implement at least a half-percentage point reduction in two of the four meetings before January. This expectation reflects the market's anticipation of significant monetary policy adjustments in response to economic conditions.