Bond Trader Places Record Futures Bet on Eve of Inflation Data

Summary:
A significant block trade in US short-term interest-rate futures, specifically in December 2024 SOFR futures, occurred on Tuesday, marking the largest trade of its kind. This trade contributed to driving gains in the Treasury market. The substantial trade volume suggests investor sentiment regarding the interest rate set by the Federal Reserve. The trade, likely initiated by a buyer, coincided with expectations of benign March consumer price index data, potentially leading to a revival in expectations for Fed rate cuts. Confidence in this outlook was reinforced by State Street Global Advisors predicting an aggressive half-point Fed rate cut by June and remarks from US President Joe Biden’s economic aide, Lael Brainard. The swaps market is pricing in approximately 65 basis points of Fed rate cuts by year-end. The December 2024 SOFR futures were trading slightly higher than the block trade’s price, indicating continued market activity and investor interest in hedging or speculating on interest rate movements.

Our take (from the Straight to Smart newsletter):

Positive Data Shatters Rate Cut Dreams

Article Excerpt:
Key Takeaways:
  • 75,000 block trade in December SOFR futures is biggest ever
  • Wager helped drive gains for front-end Treasuries Tuesday

Click to read original article (Subscription may be required):
Bond Trader Places Record Futures Bet on Eve of Inflation Data

Do you want expert help evaluating the best alternatives for you and your business?

Call us at (415) 510-2100 or use the chat box on this page to sent us a message. We’ll help you right away!

YOU MAY ALSO BE INTERESTED IN…

Interest Swaps or Rate Caps

Interest rates are in constant flux and having flexibility is critical to adapting and capitalizing on market changes. Whether you’re seeking to satisfy a mandatory hedging requirement from your lender, evaluating a refinancing opportunity or overseeing a portfolio of loans or bonds, every basis point has an economic impact, and we make sure your interests are protected.

To learn more about managing interest rate risk and what your best moves are please click here.

Click To Unmute

Defeasance Services

A successful defeasance, by releasing you from your mortgage obligation, unlocks your ability to take advantage of historically low rates. Derivative is an experienced Defeasance Consultant. We make certain all the intricate legal and financial details are fully completed and done on time. We specialize in making your defeasance stress and worry free.

To learn more about what defeasance is click here.

Check out our defeasance cost calculator.

Click To Unmute