Traders bet on a significant interest rate cut by the Federal Reserve next month Traders are heavily betting that the Federal Reserve will cut interest rates by over 25 basis points next month, leading to a surge in demand for related SOFR options and a significant increase in open contracts for a 50 basis point rate cut. Despite the recent unexpected inflation data leading to a partial pullback in expectations of interest rate cuts, the market still generally remains optimistic about the prospect of interest rate cuts. Federal Reserve Chairman Powell's speech at the Jackson Hole Conference may bring uncertainty to market expectations. The yield of US treasury bond bonds fell on Tuesday, ending three consecutive days of selling.