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Traders are increasingly expecting a Federal Reserve interest-rate rise at the upcoming policy meeting set to conclude on November 1st, 2023. This anticipation is backed by a notable surge in November fed funds futures, as reflected in CME Group Inc. (NASDAQ:CME)’s open-interest data, a move that aligns with the Fed’s strategy of maintaining elevated borrowing costs to tackle inflation.

Fed Chair Jerome Powell is scheduled to address the market today, Thursday, which may further sway market sentiment. Currently, positions carry a risk weighting of approximately $4.4 million per basis-point move. The market also awaits another critical policy decision due on December 13, 2023.

A record trading day saw 238,000 contracts exchanged, with about 6 basis points of hike premium factored into the November meeting. An impressive number of contracts—over 100,000—were sold in just one second.

The Fed has previously hinted at one more rate hike this year, occurring in an environment of Treasury yields reaching multi-year highs. This expectation and the consequent market response underscore the sensitivity of traders to interest rate movements and the potential impact on borrowing costs and overall economic activity.

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