Traders Boost Bets on Half-Point Fed Rate Cut by Year-End (2)

Bond traders are stepping up options wagers that the Federal Reserve will deliver at least one half-point interest-rate cut across this year’s three remaining policy meetings.

Officials are projected to lower borrowing costs on Wednesday for the first time in 2025, with a quarter-point reduction seen as the most likely decision. But a cooling labor market is leading some traders to hedge against the risk that a souring economic outlook leads to bigger moves in the coming months, even as inflation remains sticky.

Trading flows this week linked to the Secured Overnight Financing Rate, which is highly sensitive to ...