Nick Timiraos: Federal Reserve Chairperson Jerome Powell turned again at Jackson Hole, but this time it is significantly more cautious than last year, as inflation is gradually moving away from the Fed's target and policy is not as tight as it was a year ago.
Traders are pouring into a particular option bet that the Federal Reserve will slash interest rates by more than 25 basis points next month. Since the beginning of this month, there has been strong demand for positions related to the overnight guaranteed funding rate (SOFR), which is closely tied to policy expectations. This week, traders are up the ante again, targeting an uncut of 50 basis points for positions squaring...