Bond Traders Ramp Up Rate Hike Bets Following Strong U.S. Jobs Report, Pricing in 25bp by Year-End

Following strong U.S. non-farm payrolls last Friday (June 5), bond traders have significantly increased their positioning in interest rate options, particularly in derivatives linked to the Secured Overnight Financing Rate (SOFR), signaling expectations for aggressive Federal Reserve rate hikes. Futures markets have already priced in a full 25 basis points of rate increases by year-end, while speculative hedge funds have driven their net short positions in SOFR futures to record highs.
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