Reported 4 months ago
Options traders are increasingly betting on the Federal Reserve keeping interest rates higher for a longer period, showing more hawkish views compared to the swaps market. The wager has gained attention since March and has grown with recent positive growth and inflation data, including unexpected rises in US consumer confidence. This indicates a belief in the Fed sticking to its current path or even raising rates in the coming year. Traders are utilizing put-flies strategies, with some targeting an effective Fed policy rate of around 5.75% by the end of next year, reflecting a difference in expectations compared to the swaps market.
Source: YAHOO