Bond Traders Bet On Fed Rate Hike Amid Economic Reports

According to PANews, a group of bond traders is betting on a Federal Reserve interest rate hike, contrary to the prevailing expectation of a rate cut. This speculation emerged after the U.S. released a robust employment report on January 10, contrasting with Wall Street's consensus of at least one rate cut this year. Despite a moderate inflation report on Wednesday that supported the Fed's dovish stance and led to a decline in U.S. Treasury yields from multi-year highs, the contrarian bet persists. Institutional analysis indicates that traders currently see a 25% chance of a rate hike by the end of the year, based on options linked to the secured overnight financing rate. Before the Consumer Price Index data was released, these bets were as high as 30%. Until just over a week ago, a rate hike was not even considered. Former New York Fed economist Phil Suttle anticipates a rate increase in September, stating, "This is not a crazy view."