Powell to Deliver Speech on Friday Evening, Some Traders Lower Rate Cut Expectations
BlockBeats News, August 20: Federal Reserve Chairman Powell is scheduled to deliver a key speech at this year's gathering in Wyoming on Friday evening Beijing time. Meanwhile, the latest release of higher-than-expected inflation data has led some traders to lower their interest rate cut expectations, while still maintaining the judgment of a rate cut next month.
Ian Lyngen, head of U.S. Rate Strategy at BMO Capital Markets, stated in a research report that "as the market prepares for Powell's speech at Jackson Hole, the biggest risk facing the Treasury market is: Fed Chair may pour cold water on the market's widespread expectation of a rate cut in September."
Currently, about 325,000 options positions (costing about $10 million) stand to make a profit of up to $100 million if they correctly predict a 50 basis point rate cut by the Fed at the September policy meeting. In addition, current market pricing indicates an approximately 80% probability of a 25 basis point rate cut at the September 16-17 meeting. (FXStreet)
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