A hawkish fed bet is making a buzz in a major part of the rate market


Photographer: Andrew Harrer / Bloomberg

According to Federal Reserve policy, in the corner of the US rates market, a condition has emerged that traders will provide a handsome payment if they expect the next tightening cycle to begin over time.

The trade is through options on Europod futures, and it has been building in size over the past one week. Coincides with the ramp-up Elections suggesting increased opportunity for Democratic sweep of both White House And Congress in the November 3 election. For many investors, this scenario would pave the way for an important fiscal-spending package, potentially accelerating the economy’s rebound from the epidemic and accelerating inflation toward the Fed’s goal.

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