'Fed On Hold In 2024' Trade Is Picking Up Steam... But Stocks Don't Care (Yet)

Nomura's Charlie McElligott noticed some rumblings of market incoherence in his latest note and bonds and STIRs markets are shifting increasingly hawkish, while stocks refuse to give up hope of a brave new utopian world where no one works and AI creates value for all...

SOFR Options flows are showing a resumption of interest in DOWNSIDE expressions (i.e. playing / hedging for higher short-term interest rates than current priced), as the “No cut in ’24 / Fed on hold” –scenario continues to pick-up more Delta with each passing week’s US economic data increasingly tying the Fed’s hands.

SFRZ4 95.00/94.625 Put 1x2 traded last week and has almost doubled in value, is a “Fed on hold” trade