Options market bets are increasing that the Federal Reserve will keep rates unchanged for the whole year.

PANews reported on January 14th that, according to Jinshi, a growing number of options traders are ruling out a 2026 Federal Reserve rate cut and instead betting that the Fed will keep rates unchanged throughout the year. This trend can be traced back to at least last Friday, when US employment data showed an unexpected drop in the unemployment rate. Market pricing indicated that this virtually eliminated the possibility of a Fed rate cut this month, prompting more and more traders to postpone their expectations for the timing of rate cuts in the coming months.

David Robin, interest rate strategist at TJM Institutional Services, noted, "From a data perspective, the probability of the Fed keeping rates unchanged until at least March has increased, and the likelihood of stable rates grows with each subsequent meeting." Recent options flows for the covered overnight funding rate, which is closely linked to the Fed's short-term benchmark rate, have sent a more hawkish signal. New option positions are primarily concentrated in March and June contracts to hedge against a scenario where the Fed's next rate cut is further delayed. Other positions targeting longer-term contracts are expected to profit from the Fed's stance of maintaining rates unchanged throughout the year. Robin stated that regardless of whether the market believes the Fed will hold rates steady, these trades are low-cost, and as a prudent risk manager, you would want to hold these positions.