Special topicVideopokerThe Federal Reserve meeting is just around the corner, and the market is expected to stand still for six times in a row.

From: Wall Street

The market is braced for the Fed's decision, and the pricing of derivatives trading suggests that US stocks may be subject to sharp volatility, while the bond market is strongly bearish and is in a state of "almost the largest short position".

The market is ready for the Fed's decision, derivatives trading pricing suggests that U. S. stocks may usher in large fluctuations, bond market bears gather, bearish sentiment is strong.

At 2:00 Beijing time on Thursday, the Federal Reserve will announce the FOMC interest rate decision, and Powell will hold a monetary policy press conference half an hour after the interest rate decision is announced.

According to Citibank, the S & P 500 is expected to show zero on the day based on the pricing implied by the "parity arbitrage" trading strategy in the options market.VideopokerAn amplitude of .95%, which will be the biggest fluctuation in the Fed's decision-making day since May 2023.

And Citigroup also points out that options traders have been underestimating the volatility of the S & P 500 on the Fed's decision-making day.VideopokerThe actual fluctuation range. Since the beginning of 2022, the S & P 500 has fluctuated more than expected by the "parity arbitrage" strategy on every Fed decision-making day.

In addition, bearish sentiment in the bond market has also intensified.

Bond market short sellers agglomeration

Futures market data for the week ended April 23 showed that hedge funds and commodity trading advisers (CTAs) and others had established a large number of short positions in bonds. In the words of BofA strategists, it is in a state of "near-maximum short positions".

In the cash market, JPMorgan Chase's latest client survey also showed bearish bets reached a three-week high. At the same time, the SOFR options market also shows that investors have increased their positions at certain strike prices, indicating that market participants hold a significantly bearish view on the next trend of the bond market.

As the US economy remains resilient and inflation stubbornly, the market continues to downgrade expectations for the Fed to cut interest rates this year. At the beginning of this year, the market also expected the Federal Reserve to cut interest rates several times this year. At present, the market expects only one cut in interest rates this year.Videopoker. cut interest rates by 25 percentage points, and some even began to question whether the Fed would take any action.

Fed officials, including Mr. Powell, have said in recent weeks that they are willing to keep interest rates high for longer if economic data continue to be strong. Investors expect Powell to reiterate this position after this week's FOMC meeting.

Among the falling expectations of interest rate cuts, US Treasuries suffered their worst sell-off since July last year.

However, some analysts are optimistic about the bond market, pinning their hopes on short profit-taking. Ian Lyngen, head of US interest rate strategy at BMO Capital Markets, wrote in a report this week that given the current pessimism in the market, the Fed's decision on Japanese and US Treasuries is actually likely to soar.

Risk reminder and exemption clause

There are risks in the market, so you need to be careful when investing. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any comments, opinions or conclusions in this article are in line with their specific circumstances. If you invest accordingly, you will be held responsible.