PANews reported on January 20 that according to Jinshi, a group of stubborn bond traders have made a contrarian bet that the Fed's next move will be to raise interest rates, not cut them. This bet came after the United States released a blowout employment report on January 10, in stark contrast to Wall Street's consensus of at least one rate cut this year. Although the mild inflation report released on Wednesday reinforced the Fed's rate cut stance and caused U.S. Treasury yields to fall from multi-year highs, this contrarian bet still exists. An institutional analysis shows that based on options related to the secured overnight financing rate, traders currently believe that the probability of the Federal Reserve raising interest rates by the end of the year is about 25%. Before the release of the CPI data, these bets were as high as 30%. And until more than a week ago, rate hikes were not even considered. Phil Suttle, a former economist at the New York Fed, expects the Fed to raise interest rates in September, saying: "This is not a crazy view."
The market is betting against the trend: the next move of the Fed is to raise interest rates rather than cut them
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