Bond traders are stepping up options wagers that the Federal Reserve will deliver at least one half-point interest-rate cut across this year’s three remaining policy meetings.
Officials are projected to lower borrowing costs on Wednesday for the first time in 2025, with a quarter-point reduction seen as the most likely decision. But a cooling labor market is leading some traders to hedge against the risk that a souring economic outlook leads to bigger moves in the coming months, even as inflation remains sticky.