“ Bond Trader Places Largest-Ever Bet On Fed Rate Cuts In 2024 Ahead Of March Inflation Report”

Discussion in 'Fixed Income' started by TrailerParkTed, Apr 10, 2024.





  1. Bond Trader Places Largest-Ever Bet On Fed Rate Cuts In 2024 Ahead Of March Inflation Report




    Benzinga
    Apr. 9, 2024, 05:11 PM


    A bond trader has just placed a record-breaking single bet by going long on December 2024 short-term interest rate futures.

    This strategy will pay off if the Federal Reserve cuts interest rates at least three times by the end of the year, a scenario that is not yet fully priced into the market following recent robust economic data and higher-than-expected inflation figures.

    The Secured Overnight Financing Rate (SOFR) futures — the tool used to assess market wagers on Fed interest rates — suggest that traders are anticipating a total of 68 basis points in rate cuts by the end of the year.

    What Happened: A significant transaction involving 75,000 December 2024 SOFR futures contracts through a block trade occurred shortly after 9 a.m. New York time on Tuesday, according to Bloomberg.

    The CME Group verified this as the most substantial transaction for this product ever recorded, the report said. Block trades are substantial, privately negotiated transactions conducted at a single price…”




    The block trade for the December 2024 SOFR futures was executed at 95.320.






    https://markets.businessinsider.com...24-ahead-of-march-inflation-report-1033234892
     
    ajacobson likes this.
  2. maxinger

    maxinger

    upload_2024-4-11_8-52-13.png

    What a badly written report by the writer and OP.

    You have to show the overall picture;
    you have to show the SOFR futures chart.
    On 9 Apr 2024, there is no significant increase in volume (see histogram).
    I presume the histogram volume includes the block trade volume.


    So it seems to be trivial news.

    Of course, those who have bought the bond
    wants to have big publicity.
    More publicity,
    more people buy the bond.
    Then the bond price will go up.
     
    Last edited: Apr 10, 2024
  3. Repoguy

    Repoguy

    It was reported that this trade was a new long in the market. Open interest increased from 1.196M on April 8 to 1.251M on April 9 a 55,000 increase.

    @ $25 per tick works out to $46,000,000 loss

    My guess not a straight bet but sure is painful
     
  4. maxinger

    maxinger


    Usually, traders trade spread (calendar spread, spread across different bonds/notes ...)
    and not just outright.
    With the spread, his loss should be <<$46 million.

    I guess his stop is $1 billion
    and target profit of a few billion dollars.
     
    TrailerParkTed likes this.