BlackRock Research Report: It is expected that the Federal Reserve will start cutting interest rates in September, and there is even a reasonable basis for a 50 basis point cut

ChainCatcher news, according to Jinshi news, for several weeks, investors have been continuously pouring into swap contracts, options, and directly going long on U.S. Treasuries, betting that slowing inflation will allow the Federal Reserve to lower borrowing costs in the coming months. This view received initial validation on Tuesday: after the release of July inflation data, short-term U.S. Treasury yields fell sharply, while swap contract traders raised the probability of a rate cut in September to 90%.

More notably, bets on the Federal Reserve cutting rates by more than 25 basis points in September are also heating up. Traders added about $2 million in premiums to positions related to the Secured Overnight Financing Rate (SOFR) that would profit from an unexpected rate cut.

"Today's (Tuesday) inflation data, while slightly stronger than in previous months, is far below the levels of concern for many," said Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock, in a research report. "Therefore, we expect the Federal Reserve to initiate a rate cut in September, and there is even a reasonable basis for a 50 basis point cut."

In addition, Goldman Sachs' trading and research team previously stated that the market is underestimating the likelihood of a 50 basis point rate cut by the Federal Reserve in September.