Traders are betting on slower pace of Fed rate cuts with decreased expectations for June

From Yahoo Finance: 2025-05-06 16:32:00

Traders are expecting a slower pace of interest-rate cuts from the Federal Reserve this year, with only three quarter-point reductions priced in compared to four at the beginning of April. Additional cuts are expected next year, making 2026 the most priced-in year for cuts in the current easing cycle. Market expectations for a cut at the June policy meeting have also decreased due to strong employment data and economic indicators hinting at strength. Investors are closely watching comments from Fed Chair Jerome Powell for clues on future rate cuts and the impact of President Donald Trump’s economic policies. Options markets are reflecting positioning for later rate cuts, with increased de-leveraging and unwinds in the front end of the curve. The JPMorgan Treasury client survey showed increased long positions and a shift away from neutrals, while SOFR options activity and Treasury options skew indicate market sentiment towards puts and calls. CFTC futures positioning data shows asset managers increasing net duration longs and hedge funds adding to net duration shorts across Treasury futures, reflecting market expectations and sentiment.



Read more at Yahoo Finance: Traders Bet It Will Take Longer for Fed to Start Cutting Rates