U.S. bond traders raise expectations for interest rate cuts this year, with some positions betting on a one-time rate cut of 50 basis points next month

Bond traders are upping their bets on the Federal Reserve cutting interest rates this year in light of signs of a weakening U.S. economy. Options positions tied to the secured overnight funding rate (SOFR) show investors are bracing for a possible rate cut at each of the three remaining Fed meetings this year, with a cumulative 75 basis point cut expected in 2025. Other SOFR-related trades are betting the Fed will cut rates by a one-time 50 basis points at the September meeting. Last week's weak non-farm payrolls report boosted investor confidence that the Fed will cut rates to support economic growth, a move Trump has been calling for, but Fed officials have so far stayed on hold. A report released on Tuesday showed that growth in the U.S. services sector stalled in July, further exacerbating market concerns.