Traders are preparing for the latest financial estimates that assume the number of rate cuts by the FOMC will not decrease.

December 18, 2024 13:43 JST (excerpt)
There are expectations that the total incorporation by FOMC participants will remain at 0.5 points.
Some interest rate options traders believe that the market is too hawkish.

Bond traders are increasing their options and futures investments in that direction, preparing for the possibility of a significant rate cut next year by the Federal Reserve more than market Financial Estimates.
At the Federal Open Market Committee (FOMC) meeting on the 17th and 18th, a 0.25 point rate cut is almost certain, with the latest quarterly forecast being a key focus. The dot plot of FOMC participants at the September meeting showed an expected total rate cut of 1 point for both this year and next year.
However, in a situation where inflation is not easily contained, Wall Street financial institutions have begun to assume that the number of interest rate cuts by FOMC participants next year will likely be one fewer. This implies a total rate cut width of 0.75 points, but there are also expectations that the total incorporation by FOMC participants will remain at 0.5 points, which broadly aligns with the outlook reflected in the swap market.