Mysterious trader bets on a 50 basis point rate cut by the Federal Reserve, CME sees the largest block trade in federal funds futures history

ChainCatcher news, in the federal funds futures market at the CME, there is a "mysterious trader" currently hedging against a super-dovish surprise in this week's Federal Reserve decision.

According to researcher Ed Bolingbroke, there was the largest block trade in federal funds futures history on Monday, involving 84,000 contracts of the October federal funds futures, which corresponds to a risk exposure of up to $3.5 million per basis point. The CME confirmed this trade on the X platform, and it is reported that both the price and timing of the block trade align with buyer characteristics. Given that the current swap market has fully priced in a 25 basis point rate cut expectation, this move may suggest that the mysterious trader is hedging against the risk of a 50 basis point cut in Wednesday's Federal Reserve decision.