Mysterious trader bets on 'Fed unlikely to cut interest rates', SOFR options trading profits about $10 million According to BlockBeats, on March 17th, a short-term interest rate option trading bet that the Federal Reserve will maintain high interest rates in the long run recently earned about $10 million and closed before the Federal Reserve's interest rate meeting. The transaction was established in January of this year, linked to options related to the overnight secured financing rate (SOFR), with the core bet being that US interest rates would be higher than market expectations by mid-2028. According to the open interest data released by the Chicago Mercantile Exchange Group (CME), there was a selling behavior of related options last Friday, indicating that the position has been profited recently. Due to the fact that such interest rate derivative transactions are usually conducted anonymously, it is currently impossible to confirm the specific trading institution or individual. Market analysis suggests that this transaction was already planned before the outbreak of the Middle East conflict. With the recent surge in crude oil prices to their highest level since 2022, concerns about inflation have once again intensified in the market. Traders have begun to lower their expectations of interest rate cuts from the Federal Reserve, causing SOFR futures to fall and corresponding put option prices to rise, turning the position into a profit. At present, the market expects that the Federal Reserve will only cut interest rates by about 25 basis points by the end of this year, far lower than the market's expectation of at least two interest rate cuts at the end of February. At the same time, forward interest rate expectations have also been raised, for example, the SOFR futures rate due in June 2028 has increased by about 30 basis points compared to early March. The position has been closed before the Federal Reserve's interest rate decision this week. The market generally expects that policy rates will not be adjusted at this meeting, but investors will focus on Jerome Powell's press conference to assess how the Federal Reserve can balance the inflationary pressures brought about by rising oil prices with signs of a weakening labor market.