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Golden Ten Data reported on June 17 that options traders are increasingly divided over the Federal Reserve's near-term interest rate path, with various bets ranging from rate cuts in the coming months to hikes of different magnitudes. Swap market pricing indicates that it is almost certain the Federal Reserve will keep rates unchanged at Wednesday’s meeting, and all attention will turn to Chair Waller’s first press conference in search of clues about future policy. Although the US and Iran are preparing to formally sign a temporary peace agreement, which has caused oil prices to fall to a three-month low and offered some relief to inflation pressures, future policy remains uncertain.

Currently, with a significant increase in crop yields, lawmakers are considering expanding the ethanol market based on corn as a raw material. Research from S&P Global Energy shows that thanks to improved technology, crop yields continue to climb, resulting in a persistent surplus in supply; however, at the same time, market demand remains stagnant. The research states that this situation will lead to a reduction in farmland acreage and declining farmer profits. Expand

This means that if Waller releases dovish remarks, dampening expectations of rate hikes in the coming months, short covering capital inflows could amplify any rally in the bond market.