Trader Bets Swell on Trump-Backed Fed, Data Stoking US Rate Cuts

Economic

Bond

Summary:

Traders boost bets on U.S. rate cuts as Trump signals Kevin Hassett for Fed Chair and delayed labor data looms, driving SOFR futures activity and Treasury curve-steepening plays.

Traders are piling into bets that a new Federal Reserve chair and the release of delayed economic data this month will support Donald Trump’s calls for lower interest rates.

In the US futures market, demand is building for short-term curve structures linked to the Secured Overnight Financing Rate, which closely tracks perceived outcomes of Fed interest rate decisions. The wagers reflect the potential for monetary policy easing to gather pace after chair Jerome Powell’s term ends in May. The June 17 announcement will be the first under a new central bank chief.

The new positions started to build after White House National Economic Council Director Kevin Hassett emerged as the frontrunner to succeed Powell. Trump said Tuesday that the race is “down to one” while referring to Hassett as a “potential Fed chair” during a cabinet meeting. He said he would announce his decision early next year.

Trader Bets Swell on Trump-Backed Fed, Data Stoking US Rate Cuts_1

The announcement “will create a ‘shadow Fed chair’,” Kristina Hooper, chief market strategist at Man Group, wrote this week. “This could complicate the Fed’s ability to communicate monetary policy and could create some confusion for markets at a time when they need clarity.”

Traders in the leveraged futures market are already gaming out the scenarios with a huge buyer emerging Monday in one SOFR futures fly — the largest trade seen in that particular structure in more than a year. Recent sessions have also seen elevated activity in 3-, 6- and 12-month SOFR spreads, as traders look to target more rate cuts.

Delayed Data

It’s not just the next Fed chair announcement driving activity across futures spreads. Goldman Sachs strategists are looking to hedge ahead of the November labor market data due Dec. 16, just before the January policy meeting. The data, delayed by the US government shutdown, could spur more dovish bets if they confirm recent signs of softening.

“We continue to see greater asymmetry for the front-end to pull forward cuts given the trend in labor market slack measures,” strategists including George Cole said in a Nov. 28 note.

They favor positions benefiting from a curve steepening by targeting short-dated futures via SOFR Dec26/Dec27 spreads and further out the curve with conditional 2s10s bull steepeners. These bets will gather further traction if Hassett is confirmed as the next Fed chair.

Wagers on a dovish policy shift and a ramp-up in December rate-cut odds pushed 10-year Treasury yields below the 4% mark last week. US Treasuries held marginal gains on Wednesday, with the 10-year yield slipping one basis point to 4.08%. That’s down from 4.11% on Tuesday, its highest level in nearly two weeks.

Jack McIntyre, portfolio manager at Brandywine Global Investment Management, said that cutting rates while inflation is still above the Fed’s target could drive yields on long-end Treasuries higher, even as short-term rates fall.

“If Hassett is confirmed, the most likely outcome is bear steepening,” said McIntyre. “I think of myself as part of the bond vigilantes. My job is to send a message to the administration. Do we need to send that message now? It’s too early to say. For me, it’s still wait-and-see.”

Here’s a rundown of the latest positioning indicators across the rates market:

JPMorgan Survey

For the week ending Dec. 1, investor long positions dropped nine percentage points, with shorts rising 3 percentage points. As a result, the net long position dropped to the fewest since Nov. 3.

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New Risk in SOFR Options

In SOFR options out to the Jun26 tenor, activity has focused around the 96.3125 strike following flows over the past week for new risk including a buyer of the SFRZ5 96.25/96.3125 call spreads and SFRZ5 96.3125/96.375 call spreads. Flows also included a buyer of SFRZ5 96.3125/96.375 2x1 put spreads as traders look to position around the Dec. 10 policy meeting, where currently around 22 basis points of rate cuts are priced.

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In SOFR options across tenors out to the Jun26 contracts, the 96.25 strike remains the most populated due to continued demand for upside call structures involving the level in Dec25 options. There’s also a large amount of open interest in the Dec25 96.50 and Dec25 96.375 calls. For large outstanding put structures, the Dec25 96.25 and Dec25 96.1875 put strikes are significantly populated.

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Treasury Options Premium

The premium paid on options to hedge Treasuries over the past week has continued to drift around neutral. Premium in the front and intermediates of the futures strip continues to slightly favor calls over puts, indicating traders paying more to hedge a Treasuries rally in the front end and belly of the curve versus a selloff.

Trader Bets Swell on Trump-Backed Fed, Data Stoking US Rate Cuts_5

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Michelle

Cryptocurrency

Ethereum (ETH) is trading at around $3,065, with a 24-hour trading volume of $30 billion. The price has climbed 9% in the last day and 4% over the past week.

ETH is now sitting near a key level that could decide its short-term direction, as traders keep a close eye on $2,800.

$2,800 Support May Define the Next Trend

Crypto analyst CryptosRus said,

"$ETH is sitting right on $2,800, one of the biggest support zones on the chart." they added, "Hold it → room back to $3,300 and even $3,900. Lose it → volatility at $2,500 HVN, then a real shot at $2,300."

ETH has rebounded after recent weakness, but it remains close to this key zone. Price charts show a bullish candle on the daily close, though a clear breakout is still needed. Traders are watching the higher low trendline for confirmation of a push toward $3,700. For now, short-term setups on smaller timeframes are driving activity.

High Leverage Meets Lower Open Interest

Data from Binance shows Ethereum's leverage ratio at an all-time high of 0.57, according to CryptoOnchain. This means many traders are using borrowed funds. At the same time, open interest has dropped to $6.6 billion, which suggests "a lot of froth already flushed out."

Notably, this creates a mixed setup. High leverage increases risk, while the drop in open interest shows that many weaker positions may have already been cleared. Traders are warning that the current build-up could lead to sudden price moves if the market reacts sharply near current levels.

Short-Term Levels and Chart Patterns

CRYPTOWZRD shared that the $3,055 level is now an important intraday resistance. They explained that ETH recovered well but may be forming a double-top.

"A bearish pullback and then a bullish move again will offer a quality long setup, otherwise there may be a fake-out," they said.

The next lower support is around $2,880. If the asset holds there and finds buyers, traders may look for long entries.

On higher timeframes, ETH is forming a bullish wedge and inverse head-and-shoulders, based on recent analysis reported by CryptoPotato. These patterns are being tracked by traders expecting a breakout above $4,500.

Meanwhile, institutional buying is also active. BitMine, linked to Tom Lee, recently purchased over 30,000 ETH—worth close to $92 million. This shows growing interest from larger players, even as the market tests a critical zone.

Source: CryptoSlate

Risk Warnings and Disclaimers

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Adam

Commodity

Russia-Ukraine Conflict

Oil rose as traders weighed talks between the US and Russia that have so far failed to end the war in Ukraine, while attacks on Moscow’s energy assets continued.

Brent traded near $63, though prices have been lacking direction in recent days. The Kremlin said President Vladimir Putin held “very useful” talks with US envoys Steve Witkoff and Jared Kushner, though the sides failed to reach agreement on a plan to end the conflict in Ukraine. European defense stocks rose and Ukrainian bonds fell.

The talks came against the backdrop of another attack on a Russia-linked ship, but it remains unclear who carried out the strike. Putin warned that Moscow may consider striking the vessels of countries supporting Ukraine if hits on the nation’s fleet do not stop, state-run Rossiya 24 TV channel reported.

Oil Gains as Traders Weigh the Next Steps in Russia-Ukraine War_1

“The Brent crude price remained roughly unchanged in the low $60s over the last week as Russia-Ukraine peace talks continue,” Goldman Sachs Group Inc. analysts including Yulia Zhestkova Grigsby said. “Oil markets and prediction markets do not appear to price a large probability of a near-term peace agreement and removal of the sanctions on Russia oil.”

Geopolitical tensions are keeping the market jittery and adding a risk premium to prices, partly countering concerns about a growing surplus. That includes US rhetoric against Venezuela, with US President Donald Trump suggesting the Pentagon will soon start targeting drug cartels with strikes on land.

Meanwhile, an industry report showed nationwide US crude stockpiles increased by about 2.5 million barrels last week, while inventories of gasoline expanded. Government figures, including on demand, are due later Wednesday.

Source: Bloomberg

Risk Warnings and Disclaimers

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Glendon

Russia-Ukraine Conflict

Russian President Vladimir Putin has accepted some U.S. proposals to end the war in Ukraine while rejecting others, according to the Kremlin on Wednesday.

Kremlin spokesman Dmitry Peskov told reporters that Russia is ready to meet with U.S. negotiators "as many times as it took to reach an agreement" on Ukraine.

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The statement follows talks in Moscow between Putin and U.S. President Donald Trump's special envoy, Steve Witkoff, and son-in-law Jared Kushner. The discussions extended into the early hours of Wednesday morning.

Peskov emphasized it would be incorrect to say Putin had rejected the U.S. proposals, describing the meeting as a first face-to-face exchange of opinions. A Kremlin aide had earlier stated that "compromises have not yet been found."

The Kremlin indicated that work on a possible Ukraine deal is currently being conducted at the expert level, adding that such talks have a better chance of being productive if carried out without public commentary.

Russian officials expressed appreciation for Trump's efforts, with Peskov stating that the Kremlin "highly values Trump's political will to try to find a resolution and is grateful to him for his efforts."

The Kremlin also noted that the results of ongoing expert-level work should form the basis for high-level conversations between Russia and the United States.

When asked for additional details, the Kremlin declined further comment, stating it does not favor "megaphone diplomacy."

Source: Investing

Risk Warnings and Disclaimers

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Warren Takunda

Economic

In a midweek appearance before the Senate Economics Legislation Committee, Bullock said the country's labour market is "a little tight", and the output gap has "probably closed".

This is how economists say the economy is at a point that it is at risk of becoming increasingly inflationary, something the RBA would guard against.

She said persistent inflation will affect the future policy path and the RBA is "alert to the possibility CPI pressures might be building."

"If CPI pressures build, the board will respond accordingly," she says.

This "development that would encourage a stronger Australian dollar," says MUFG Bank Ltd in a note released Wednesday.

Bullock's comments signal that the RBA has shifted from a rate cutting cycle and is in the early stages of laying the path to higher rates. As recently as August, Bullock was preparing the market for another interest rate cut, having reduced the cash rate by 25 basis points.

But the 'curve' has adjusted massively and money market pricing shows investors are now positioned for a hike in the second half of 2026. This

"The Australian rate market has moved to almost fully price in a rate hike from the RBA in light of the tighter than expected labour market conditions and the pick-up in inflation pressures," says a note from MUFG Bank Ltd.

ANZ, one of the country’s largest lenders, said this week it has readjusted its expectations for the future of Australian rates.

Economists at the bank say they now expect the cash rate to remain at 3.60% for an "extended" period, marking a significant shift from earlier forecasts that assumed additional easing in 2026.

The bank says recent inflation pressures, steadier economic growth and a labour market moving into balance mean the RBA is unlikely to deliver further cuts.

At the same time, ANZ says it is "difficult to see a rate hike in 2026", pointing to the rise in unemployment over the past year and conflicting signals across demand indicators.

Source: Poundsterlinglive

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Adam

Stocks

US equity indexes rose amid thin trading volumes as a rebound in cryptocurrencies and a further improvement in the odds of a third consecutive interest-rate cut helped risk sentiment remain positive on a data-light Tuesday.

The Nasdaq Composite rose 0.6% to 23,413.67, with the Dow Jones Industrial Average up 0.4% to 47,474.46 and the S&P 500 higher by 0.3% to 6,829.37. Technology, industrials, and communication services led the gainers. Energy and materials were among the decliners.

Nasdaq's trading volume after midday was 6.56 billion, compared with a daily average of about 9.72 billion. The figures for the S&P 500 were 2.96 billion and 5.47 billion, respectively. For the Dow, the data stood at 510.9 million, versus 520.8 million.

Bitcoin jumped 6% to $91,806, and Ether advanced 7.3% to $3,007.

US Treasury yields fell, with the two-year yield down 2.9 basis points to 3.51%. The 10-year yield edged slightly lower to 4.09%, retreating from a surge to 4.11% on Monday.

The 30-year yield on Japanese government bonds set a record intraday high, but benchmark borrowing costs ended the day lower, following a well-received debt auction, The Wall Street Journal reported. Japanese yield gains could dampen the country's demand for US Treasurys and disrupt the carry trade, in which investors borrow cheaply in yen to make leveraged bets.

Nasdaq stocks and cryptocurrencies are reportedly among the main beneficiaries of the carry trade.

Meanwhile, markets are now pricing an over 89% probability that the Federal Reserve, which has already delivered two back-to-back cuts this year, will reduce its benchmark lending rate by a quarter percentage point on Dec. 10, according to the CME FedWatch tool. The likelihood was more than 86% a day ago, over 85% a week earlier, and 63% a month ago.

The Organization for Economic Cooperation and Development revised up US economic growth forecasts to 2.0% from 1.8% this year, and to 1.7% from 1.5% next year. These projections, however, mean that the OECD expects growth to fall from last year's 2.8%.

The RealClearMarkets sentiment index, the first consumer measure for December, rose to 47.9 from 43.9 in November, a print showing pessimism. Raghavan Mayur, president of TechnoMetrica, which compiles the survey, said that the end of the government shutdown lifted confidence, while headwinds include inflation, tariffs, and high interest rates.

Redbook US same-store sales last week jumped by 7.6% from a year earlier, following a 5.9% increase in the prior week, amid higher sales on Black Friday and the weekend following Thanksgiving. Through the fourth selling week for November, sales were up 6.4%, missing the 6.7% target.

Online spending at this year's Cyber Monday rose more than projected to $14.25 billion, Adobe (ADBE) Analytics' holiday shopping data showed. In October, Adobe forecast Cyber Monday spending would grow 6.3% year-over-year to $14.2 billion. Cyber Monday e-commerce sales totaled $13.3 billion last year.

In company news, Boeing (BA) shares surged 10%, the top gainer on the S&P, after Chief Financial Officer Jay Malave said deliveries of 737 and 787 jets will increase next year.

Source: MT Newswires

Risk Warnings and Disclaimers

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Pepperstone

Cryptocurrency

Forex

MicroStrategy's $807 Million in Annual Interest and Dividends

The irony is that Strategy is relying on fiat to fund the $807m per year in interest and dividend payments across its debt and preferred-share tranches. Meeting these obligations is essential if Saylor is to keep the good ship MSTR afloat and keep the holders of the $17bn in preferred stock and convertible notes satisfied.

How MicroStrategy Must Finance Itself in 2026: Equity Issuance or Bitcoin Sales

To achieve this in 2026 (and beyond), Strategy will need either to continue issuing new shares or sell part of its 650,000 BTC holdings on the balance sheet.Given the choice, Saylor has made it clear he will never willingly sell Bitcoin - but in 2026 that decision may well be taken out of his hands. Ultimately, Mr Market could decide it for him.

Schiff's Incorrect Claim About MSTR Selling Bitcoin

On Monday, Schiff incorrectly claimed that MSTR had sold BTC on-market to fund upcoming interest payments. This misstep didn't help his argument, even if his broader critique of MicroStrategy's increasingly complex capital structure still resonates.

MicroStrategy's $1.44 Billion Reserve Fund: 21 Months of Coupon Cover

MicroStrategy subsequently disclosed a US$1.44bn reserve fund to cover senior-debt obligations - providing around 21 months of dividend and coupon cover. This may offer short-term support to the MSTR share price. But the short sellers are circling, with short interest is now around 41%, a level that adds fuel to both upside squeezes and downside volatility.

Market Net Asset Value (mNAV): Why MSTR's Premium and Discount Matters

Until recently, traders were focused on market net asset value (mNAV) - now around 1.15, meaning MSTR trades at a small premium to the total BTC value on its balance sheet. It has even traded at a slight discount, which historically would be extremely bearish for MicroStrategy.

Why TEV mNAV Is Now the Key Metric for MSTR's True Valuation

With the company's capital structure changing - and $17bn of senior claims above the equity — the market has pivoted to TEV mNAV (Total Enterprise Value / Bitcoin Value).This metric captures:

· Total debt

· All preferred-stock tranches

· Equity market cap

TEV mNAV remains well above 1.0, suggesting Saylor still has options to raise capital and maintain the company's leveraged Bitcoin strategy.

Why Saylor Needs TEV mNAV Above 1 to Keep Issuing Equity

As long as MSTRs TEV mNAV ratio stays comfortably above 1, Saylor can be reasonably confident that investors will support further equity issuance, enabling MicroStrategy to continue using leverage to accumulate more BTC.

What Happens if Bitcoin Falls Below $74,436? The Liquidation Risk

However, with $17bn above the equity, if BTC were to fall significantly below $74,436 (MicroStrategy's average BTC purchase price) and traders increased its concerns for its future solvency, the deep subordination would radically increase the risk premium for MSTR common equity stockholders – a factor which could catalyze the selling.

Why MSTR Moves More Than Bitcoin: High-Beta Leverage and Short Interest

This is why, when Bitcoin rises, MSTR often sees a much larger percentage gain, with the move amplified by heavy short interest. It's exactly why traders view MSTR as a leveraged, high-beta play on Bitcoin, not simply a proxy for BTC.

The Downside: Why MSTR Drops Faster Than Bitcoin on Red Days

Conversely, when Bitcoin trades lower, MSTR almost always suffers a larger percentage decline, reflecting its leveraged capital structure. In 2026, should we continue to see strong drawdown, the big debate will focus on the possibility that MSTR and many other crypto treasury entities could be forced to deleverage and sell down part of their crypto holdings.

MicroStrategy Holds 3% of All Bitcoin - Why That Matters for 2026–27

MicroStrategy owns around 3% of all BTC in circulation - a meaningful share, though not dominant. But Saylor is unquestionably the most prominent spokesperson for institutional Bitcoin adoption, making his financing decisions and interest-payment strategy highly relevant for BTC markets in 2026–27.

What Happens If Strategy Ever Has to Sell Bitcoin?

If BTC collapses and MicroStrategy is forced to sell part of its holdings, Peter Schiff will be the first to celebrate — loudly. In that scenario, MSTR could even start leading Bitcoin's price action on down days, particularly when cross-asset volatility rises.

Trading Opportunities Ahead: The Saylor vs Schiff Battle Intensifies

This developing standoff between Saylor's leveraged Bitcoin empire and Schiff's warnings of structural fragility will make for fascinating market theatre — and a source of exceptional trading opportunities in 2026.

Who do you think ultimately wins this battle - Saylor or Schiff?