Nomura's Charlie McElligott noticed some rumblings of market incoherence in his latest note and bonds and STIRs markets are shifting increasingly hawkish, while stocks refuse to give up hope of a brave new utopian world where no one works and AI creates value for all...
SOFR Options flows are showing a resumption of interest in DOWNSIDE expressions (i.e. playing / hedging for higher short-term interest rates than current priced), as the “No cut in ’24 / Fed on hold” –scenario continues to pick-up more Delta with each passing week’s US economic data increasingly tying the Fed’s hands.
SFRZ4 95.00/94.625 Put 1x2 traded last week and has almost doubled in value, is a “Fed on hold” trade
