Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Business https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ A Hawkish Fed bet creates buzz in important part of the price market

A Hawkish Fed bet creates buzz in important part of the price market



Marriner S. Eccles Federal Reserve Building.

Photographer: Andrew Harrer / Bloomberg

In the corner of the US fixed income market that is most aligned with Federal Reserve policy, a bet has emerged that will pay off nicely if traders move up at the time when they expect the next tightening cycle to begin.

Trading is done via options on eurodollar futures and it has been in size over the last week. The start-up coincides with opinion polls suggest a growing chance for a democratic sweep of both the White House and Congress in the November 3 election. For many investors, this scenario will pave the way for a significant fiscal package, potentially accelerating the economy’s recovery from the pandemic and accelerating inflation towards the Fed’s target.


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