Citi Traders Bet on Fed Rate Hold as Market Pricing Turns Neutral

Citi traders are betting against a rate hike from the Federal Reserve this week. According to Akshay Singal, global head of short-term interest-rate trading at Citigroup, there's 'high conviction' in keeping rates steady. The swap markets assign a 40% likelihood of a 25-basis-point hike.

Singal attributes Fed Chairman Kevin Warsh's opposition to forward guidance for market uncertainty. He believes that Warsh wants the market to focus on data, which suggests the Fed doesn't need to raise rates yet.

The market pricing for a Federal Reserve decision is closer to an even split than it has been since September 2024. At that time, traders assigned roughly equal odds to a 25-basis-point and a 50-basis-point rate cut.