Overview

• Investors added a record 70,000 October fed funds futures contracts after the weak August jobs report, signaling stronger expectations for easing.
• Large SOFR option positions are set to benefit from a 50 basis-point move next week, though most observers see a quarter-point cut as more likely.
• The 10-year Treasury yield hovers near 4.08%, a roughly five-month low, while the two-year sits around 3.55% as traders await Thursday’s CPI report.
• Interest-rate futures now imply three 25 basis-point cuts in 2025, and a Reuters survey shows 85% of strategists expect the yield curve to steepen.
• A BLS indication of a 911,000 downward payroll revision has accelerated forecast changes, with Barclays now projecting quarter-point cuts at the remaining three meetings this year.