Economic news

Trader Behind Huge Fed Funds Wager Bags $14 Million in First Day

2022.07.18 18:01

Trader Behind Huge Fed Funds Wager Bags $14 Million in First Day
Trader Behind Huge Fed Funds Wager Bags $14 Million in First Day

 

Budrigannews.com – A trader is pocketing big profits for breaking with the pack and placing a sizable bet that the Federal Reserve won’t increase the size of its interest-rate hikes. 

On Friday, someone purchased October futures with a notional value of $150 billion that are tied to the Fed’s benchmark overnight rate. The futures price in expected moves at the July and September meetings.

The trade marked a bet that financial markets had shifted too far by pricing in increasing odds that the central bank would raise its key rate by as much as a full percentage point at one of the two meetings.

The wager quickly turned profitable as expectations were dialed back heading into Friday’s close of trading. By day’s end, it was 11.5 ticks higher, amounting to a profit of about $14.4 million from the level at which the wager was placed. 

Mammoth Trade in Fed Funds Futures Bets Against Full-Point Hike

Speculation that the Fed would start increasing the size of its rate hikes had surged after Wednesday’s consumer price index report showed that inflation jumped to another four-decade high, signaling that price pressures haven’t abated even as the central bank tightens monetary policy aggressively. By Thursday, futures contracts were pricing in high odds that the Fed would increase the rate by a full percentage point at one of the next two meetings. 

But policy makers pushed back on that speculation, driving investors to pare their bets. Futures are now roughly pricing in that the Fed will raise its rate by 75 basis points at each of the next two meetings.

Preliminary CME open interest data shows a rise of 35,340 contracts following Friday’s trading activity, indicating the 30,000 block trade was most likely a new position. As of 10 am in New York on Monday, the contract was little changed from Friday’s close.

Fed members have now entered a self-imposed blackout period for speaking, meaning any shifts in market sentiment will be driven by data released ahead of the July 27 meeting. That includes reports on consumer confidence and manufacturing.

 

 

Trader Behind Huge Fed Funds Wager Bags $14 Million in First Day

Related Articles

Leave a Reply

Back to top button
bitcoin
Bitcoin (BTC) $ 79,654.34 4.27%
ethereum
Ethereum (ETH) $ 3,145.61 2.22%
tether
Tether (USDT) $ 1.00 0.04%
solana
Solana (SOL) $ 206.07 3.70%
bnb
BNB (BNB) $ 622.42 0.67%
dogecoin
Dogecoin (DOGE) $ 0.264019 23.72%
usd-coin
USDC (USDC) $ 1.00 0.15%
xrp
XRP (XRP) $ 0.581675 5.33%
staked-ether
Lido Staked Ether (STETH) $ 3,147.44 2.29%
cardano
Cardano (ADA) $ 0.580207 30.06%
shiba-inu
Shiba Inu (SHIB) $ 0.000025 26.78%
tron
TRON (TRX) $ 0.163813 1.71%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,702.80 1.47%
the-open-network
Toncoin (TON) $ 5.19 1.07%
avalanche-2
Avalanche (AVAX) $ 31.24 6.45%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 79,322.25 4.17%
weth
WETH (WETH) $ 3,142.23 2.06%
chainlink
Chainlink (LINK) $ 14.11 4.33%
bitcoin-cash
Bitcoin Cash (BCH) $ 432.28 12.49%
sui
Sui (SUI) $ 2.95 14.14%
polkadot
Polkadot (DOT) $ 5.15 14.11%
leo-token
LEO Token (LEO) $ 6.76 4.81%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,305.39 2.12%
litecoin
Litecoin (LTC) $ 75.46 4.12%
near
NEAR Protocol (NEAR) $ 4.63 1.16%
usds
USDS (USDS) $ 0.992306 0.89%
aptos
Aptos (APT) $ 10.69 6.04%
uniswap
Uniswap (UNI) $ 9.01 0.01%
pepe
Pepe (PEPE) $ 0.000012 11.05%
internet-computer
Internet Computer (ICP) $ 8.87 6.65%
bittensor
Bittensor (TAO) $ 550.82 9.81%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.46 2.29%
kaspa
Kaspa (KAS) $ 0.148185 15.62%
ethereum-classic
Ethereum Classic (ETC) $ 22.71 8.76%
dai
Dai (DAI) $ 1.00 0.07%
crypto-com-chain
Cronos (CRO) $ 0.120948 18.12%
stellar
Stellar (XLM) $ 0.107163 6.24%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.398472 5.28%
monero
Monero (XMR) $ 162.60 0.33%
whitebit
WhiteBIT Coin (WBT) $ 20.77 3.84%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.01%
aave
Aave (AAVE) $ 187.79 3.39%
blockstack
Stacks (STX) $ 1.79 7.39%
dogwifcoin
dogwifhat (WIF) $ 2.66 8.44%
mantle
Mantle (MNT) $ 0.776109 2.56%
okb
OKB (OKB) $ 42.50 4.23%
filecoin
Filecoin (FIL) $ 4.19 6.48%
arbitrum
Arbitrum (ARB) $ 0.619031 3.41%
injective-protocol
Injective (INJ) $ 24.32 6.21%
first-digital-usd
First Digital USD (FDUSD) $ 0.999012 0.13%