Federal Reserve Keeps Interest Rates Unchanged, $5 Trillion Rate Hike Bets Liquidated

By: rootdata|2026/07/31 02:39:45

The Federal Reserve maintained its interest rates at 3.5%-3.75% during the meeting on July 31, leading to a rapid liquidation of large hedge positions built around interest rate hikes. Data shows that the open contracts for August federal funds futures briefly surpassed 1 million, involving approximately $5 trillion in nominal principal. Following the announcement, CME data indicated that the open contracts for this futures contract decreased by about 140,000, and the net short positions of leveraged funds faced a reversal. The price of August federal funds futures surged quickly, turning the bearish bets on rate hikes into losses. The market had previously raised the probability of a rate hike in July to nearly 50%, but the new Federal Reserve Chair Kevin Warsh did not signal a rate hike, causing related trading to cool down.

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