Fed's hedging move against the March scenario

Fed Member Christopher Waller said that they should carefully lower interest rates. While Christopher's statements were followed with attention in the market, market players turned to SOFR option contracts to hedge themselves against the possibility of a March Fed rate cut. Although expectations for a rate cut for the whole year have decreased, some market traders have started to hedge themselves against interest in March. Following the producer price inflation data that came in lower than expected last Friday, interest in SOFR-related option contracts increased, and some investors were seen to hedge themselves against a 50 basis point rate cut. The options market continued to be active on Tuesday. Investors turned to SOFR option contracts to hedge themselves against the 25 basis point Fed rate cut in March. While a 0.19 percentage point rate cut was priced in interest swaps for March on Friday, this pricing decreased to 0.15 percentage points after Waller's statements.