Divergence Among U.S. Treasury Options Traders on Fed Rate Path, Focus on Waller's Press Conference Tone

On June 17, options traders' views on the Federal Reserve's recent rate path have become increasingly divergent, with various bets ranging from expectations of rate cuts in the coming months to differing degrees of rate hikes. Swap market pricing indicates that it is almost certain the Fed will maintain rates at its meeting on Wednesday, with all eyes turning to Chair Waller's first press conference for clues about future policy. Although the U.S. and Iran are set to formally sign a temporary peace agreement, leading to a drop in oil prices to a three-month low and providing some relief to inflationary pressures, future policy remains uncertain.