Wells Fargo CEO says lowering interest rates would be wrong until the Iran conflict ends. The odds for a 25 bps Fed rate cut after the April meeting are at 0.2% YES.
The Wells Fargo CEO’s statement reinforces a hawkish outlook from the Fed. The market for a 25 bps cut after the April meeting sits at 0.2% YES, unchanged from yesterday. The 50 bps cut market is at 0.1% YES. The ongoing Iran conflict keeps inflation risks elevated, giving the Fed little reason to ease.
Trading activity reflects deep skepticism about imminent rate cuts. Face value across both markets is $1.8M, but actual USDC traded is just $4,334. This thin volume means even a small order could swing the odds, though $13,322 is needed to move the 25 bps market 5 points, which suggests some depth on the book. No significant intraday volatility occurred in the past day.
The persistent hawkish sentiment here is tied directly to geopolitical risk. Previous coverage suggested potential for rate cuts under a new Fed chair, but the Iran conflict complicates that. At 22¢, a YES share for a 25 bps cut pays $1, a 4.5x return. That bet requires believing the Iran conflict will de-escalate rapidly, which looks unlikely given current tensions.
Traders should watch for Fed Chair Powell’s next press conference and any updates on the Iran ceasefire, both of which would directly affect the probability of a rate cut.
