Bond Traders Are Hedging Risk Fed Pivots to Rate Cuts in 2027

Markets Bonds Contact us:Provide news feedback or report an error Confidential tip?Send a tip to our reporters Site feedback:Take our Survey By Edward Bolingbroke August 18, 2026 at 8:30 PM UTC Bond traders are changing gears again. After a raft of data helped all but price out interest rate hikes for the rest of the year, wagers in the options market are looking to hedge the risk that the Federal Reserve pivots to cutting rates in 2027. The dovish wagers are at odds with recent moves in the Treasuries market, which saw yields on long-dated bonds climb to multiyear highs as a Fed on hold would keep inflation running above its target for longer. Traders in options closely linked to the central bank’s policy path are instead focusing on signs of weakness in the US economy prompting a reversal.