Traders Start Betting the Fed Will Cut Rates Sharply at Least Once Before Year-End

October 16th: Traders are starting to place bets that the Fed will carry out significant interest rate cuts at least once before the end of the year. They are firmly convinced that the policy may be more aggressive than what is currently anticipated by other market observers. Trading activities related to the Secured Overnight Financing Rate (SOFR) have recently shown that the market is increasing its positions for a half-point rate cut. This potential rate cut may occur either at a later meeting this month or the December meeting. Such expectations exceed the two 25-basis-point rate cuts that have already been priced into the current rate swap. Due to the prolonged U.S. government shutdown, the releases of key employment and other economic data have been postponed. Once the impasse is resolved, a large amount of data will come out, revealing the latest changes in the economic situation. Some people expect that this data may further demonstrate economic weakness, thereby providing support for further rate cuts. (FXStreet)