Fed warns rates may go higher and inflation data drops Thursday — position for rising rates with an inverse bond fund
A top Federal Reserve official just said she's prepared to raise interest rates if inflation doesn't come down, and a key inflation report lands Thursday morning. Bond traders are already betting the recent calm in the bond market won't last.
Idea
Fed Governor Lisa Cook explicitly said she's ready to raise interest rates if inflation stays sticky — that's a strong warning the market may be too relaxed about rates. The government's preferred inflation gauge drops Thursday, and if it comes in hot, bonds will likely sell off hard. Some traders are already placing big options bets against the current bond calm. TBT is an ETF that goes up when long-term bond prices go down (i.e., when rates rise), making it a clean way to position for this scenario without dealing with margin or complex options.