Bond Market’s Big Rate-Cut Wager Faces a Reckoning From the Fed

N

Nighthawk

The bond market’s bold bet on US interest-rate cuts is set for its biggest test yet.

After loading up on wagers that the Federal Reserve will lower rates by more than 100 basis points in 2024, investors are waiting on tenterhooks to hear Chair Jerome Powell speak Wednesday and see central-bank officials’ so-called dot-plot outlining the path of US monetary policy.

While traders trimmed their expectations for cuts in the wake of an inflation report on Tuesday — and recent positioning data suggests some are now more neutral on Treasuries than a few weeks ago — the market remains heavily invested in a Fed pivot. If the message is instead one of higher-for-longer rates, a rapid unwind of those bets will likely follow, spreading pain across the market.


https://www.bloomberg.com/news/arti...rate-cuts-after-inflation-report?srnd=premium

As of today released data of 4% core inflation, you don´t have to wait for uncle Powell to have your wildest rate cut dreams destroyed. Just hand over your monies to your friendly option market maker. :sneaky::rolleyes:
 
I notice the $VIX had a small pop in the final hour (3pm-4pm EDT):-
! VIX pop.png


Though I didn't let it shake me out of my NQ long into the close.
 
Last edited:
I don't really understand the Fed fund rate cut bets. March is at a 40% implied cut right now. It would seem to me the thing the Fed can not possibly do is cut and risk an uptick in inflation here just to juice the market a bit.

While I don't hate a very small TLT short here I am probably going to short the Russell 2000 and not bother with TLT. It is just hard me to believe anything positive the Fed is going to say is not priced in here on small caps and this Russell move off the bottom is pretty exhausted. Although I would much prefer to not establish a trade ahead of the Fed in general.
 
with inflation at 4%, I doubt fed will be implying rate cut in the near future. Inflation is known to fluctuate and come back hard like what 70-80s has told us
 
Enough of the rate cut talk. It's actually quite pathetic how desperate wallstreet and all these talking heads want rate cuts....rates were at historic lows for years, now rates at 5%, which is still historically low, and they are expecting 3... 4 ...5 ... and 6 rate cuts in 2024??? Come on. March still at almost a 50% chance?? There is absolutely zero reason for any rate cut moving forward...rates should have never been at 0%, in fact rates should be even higher than they are considering how gangbusters all these economists predict where gdp is going and upping s&p forecasts hand over fist.

Hey you know what maybe the fed should cut rates back to 2 or 3% so inflation can ramp back up, show everyone why rate cuts are a joke and extremely unnecessary today and for the far out foreseeable future.
 
metalztrader said:
I don't really understand the Fed fund rate cut bets. March is at a 40% implied cut right now. It would seem to me the thing the Fed can not possibly do is cut and risk an uptick in inflation here just to juice the market a bit.

While I don't hate a very small TLT short here I am probably going to short the Russell 2000 and not bother with TLT. It is just hard me to believe anything positive the Fed is going to say is not priced in here on small caps and this Russell move off the bottom is pretty exhausted. Although I would much prefer to not establish a trade ahead of the Fed in general.
More...



I believe that 99% of the fools who want rate cuts only do so because they want to juice the markets higher like you mentioned...

And if the 10 yr gets back to 4.5...4.75 and again 5% you'll see the Russell 2000 lose a solid 5% in no time...if by chance the 10 yr rises to 5.5 and beyond a clean 10% swift drop in the Russell 2000 is going to happen .
 
S2007S said:
Enough of the rate cut talk. It's actually quite pathetic how desperate wallstreet and all these talking heads want rate cuts....rates were at historic lows for years, now rates at 5%, which is still historically low,....
More...
Really 5% is still low historically?:-

! PrimeRate.png
 
You must log in or register to reply here.
Back
Top