Mysterious trader bets on a 50 basis point rate cut by the Federal Reserve, with the Chicago Mercantile Exchange witnessing the largest block trade in federal funds futures history

ChainCatcher message, 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 ever recorded on Monday at the front end of the curve. The Chicago Mercantile Exchange confirmed this trade on the X platform, and it is reported that both the price and timing of this 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.