Swap contract tends to a 25 basis point rate cut in September, traders reduce bets on this year's major central banks' rate cut magnitude

BlockBeats News, May 12th, with the important consensus reached in the high-level economic and trade consultations between China and the United States triggering a new round of rebound, the current trading situation in the U.S. stock market seems as if Trump's "Liberation Day" shock never happened. Futures show the S&P 500 Index (SPX) is set to rise by nearly 4% at the opening, which could propel the index well above the level of April 2nd. The Nasdaq 100 Index (NDX) is expected to re-enter a bull market.

Traders have also been cutting back on their bets on the magnitude of interest rate cuts by major central banks this year. Swap contracts tied to the Fed's meeting now favor a 25 basis point rate cut in September. Last week, these contracts implied a policy change as early as July by the Fed. However, some investors are concerned about the lack of details in the agreement announced on Monday and the risk of renewed conflict.

For a negotiated resolution to a complex trade dispute, three months is not a lot of time. It is also unclear what the objective is at the end of the easing period. When asked how to avoid another tariff hike after the end of the 90-day suspension period, Treasury Secretary Scott Bessent said on Monday that it could be further extended.