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Looking For A Last Minute 'Cheap' Trade On A CPI Miss?

Looking For A Last Minute 'Cheap' Trade On A CPI Miss?

Demand has exploded for a cheap options bet which stands to benefit should the market-implied odds of a Federal Reserve rate hike in December tumble.

As Bloomberg reports, the eurodollar call option involved expires Friday, so the biggest chance the wager has to profit lies with a weaker-than-forecast print on the September consumer price index, set for release at 8:30 a.m. New York time.

The options position emerged Wednesday, and was added to dramatically on Thursday, CME open interest data show.

Expectations are for a 0.6% rise in CPI MoM (Core CPI +0.2% exp) and the whisper number is for a 0.5% rise.

The current odds for a Dec rate hike are 80.2%…

The minutes of the Fed’s September meeting showed some officials are concerned that low inflation is more than temporary.