Historically, they said in a report, when the Fed has done a series of interest-rate increases (last week’s was the 10th since March 2022) followed by two decisions to make no change, the most common subsequent course over the next six months “has been an on-hold Fed.” The observations “argue against the extent of easing currently priced for this year.”

Barclays strategists last week looked to fade the aggressive pricing of rate cuts for this year by recommending a short position in August 2023 fed funds futures at 95.06. The trade was around 5 basis points in the money Monday.

Latest futures positioning data from the Commodity Futures Trading Commission suggests hedge funds expect the Fed to keep rates higher for longer. They increased their aggregate short into Wednesday’s Fed meeting to the biggest on record. Meanwhile, a notable theme in options last week was to fade the amount of rate cuts priced into SOFR futures.

Positioning around policy pricing for this year has entered a key period this week, with April inflation gauges slated to be released Wednesday and Thursday.