Traders begin to bet that the Federal Reserve will cut interest rates by 50 basis points in September

Bond traders are increasing their bets, believing that the Federal Reserve will cut interest rates by 50 basis points in September, rather than the standard 25 basis points. Marilyn Watson, head of global fundamental fixed income strategy at BlackRock Inc., said it's very likely that the Fed will cut interest rates in September. However, she also believes that the Fed may start taking action as early as July. Data from CME Group Inc.'s open futures contracts show that last Thursday's buying volume was close to 260,000 contracts, setting a record high for October contracts. Buying interest remained high on Friday. Any purchases at higher prices imply an expectation that more people believe the Fed might begin its first easing cycle in years with large-scale measures.