Bond traders are starting to bet that the Fed will make a big move to cut rates by 50 basis points in September

Bond traders are upping their bets that the Federal Reserve will cut rates by 50 basis points in September than they are betting on the standard 25 basis point cut in September. This is well reflected in the federal funds futures market. The release of weaker-than-expected inflation data on Thursday sparked a buying spree in October, and that momentum continued on Friday.Contracts expiring on Oct. 31 have fully digested expectations that policymakers will cut rates by 25 basis points at their Sept. 18 meeting. Any buying at higher price levels means that more people are expected to believe that the Federal Reserve could start its first easing cycle in years with a "big move". Positions also benefited from expectations of a 25 basis point rate cut on both July 31 and September 18, but traders gave up hope of a July rate cut a few weeks ago, and none of the big Wall Street banks are predicting a rate cut in July.