Tuesday Trade Idea
Trade Idea: Front-Loaded Easing Narrative
Target: December 2025 SOFR futures
Summary
Markets have quietly — and somewhat mechanically — repriced the front end of the US rates curve lower over the past few months. It’s been a grind, not a panic, and has occurred alongside a notable shift in tone from the Fed, some softening in inflation data, and a broad-based belief that policy has peaked. All of that is fair. But what’s now priced into the belly of the 2025 curve — specifically the December 2025 SOFR contract (SFRZ5) — is a world where the Fed has already delivered two cuts and is in the process of normalizing back toward neutral.
That’s where I push back…
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