Bitunix Analyst: Options Markets Bet Heavily on Lower Rates as Treasuries and Growth Narratives Diverge
TL;DR
Options markets show heavy bets on lower Treasury yields, with traders positioning for a 10-year yield drop to 4% despite current strength. This reflects confidence in Fed easing amid diverging growth narratives and structural economic cracks.
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According to Followin, On December 23, the U.S. Treasury options market saw unusually large positioning. CME data shows open interest in March-expiry 10-year Treasury options surged by 300% within a week, with total premium reaching approximately $80 million. Traders are clearly positioning for the 10-year yield to fall toward the 4% level in the coming weeks. This move is widely viewed as a “vote of confidence” in the Fed’s future easing path and signals that some capital is pre-positioning for a decline in rates.
Notably, this aggressive positioning comes despite Treasury yields showing little immediate weakness, with the 10-year yield still hovering above 4.15%. At the same time, the MOVE index has dropped to a four-year low, suggesting surface-level calm while directional divergence builds beneath. The option expiry closely follows the January FOMC meeting, making these positions highly sensitive to policy language and upcoming labor data.
From a macro perspective, U.S. Q3 GDP is expected to remain above 3%, maintaining the appearance of strength. However, structural cracks are emerging: consumption is increasingly concentrated among higher-income households, business investment is driven mainly by AI and large corporations, while lower- and middle-income consumers face mounting pressure. Government shutdown effects and tariffs may further weigh on coming quarters. The coexistence of sticky inflation and slowing growth has strengthened market consensus that current growth momentum may not be sustainable.
Bitunix Analyst View:
Markets are now trading two narratives simultaneously: near-term economic data remains resilient, while the medium-term policy bias is shifting toward easing. The surge in options positioning does not reflect an imminent recession call, but rather an expectation that the rate inflection point will arrive before a growth downturn. If marginal cooling in employment or inflation is confirmed, a rapid repricing lower in Treasury yields could become the key catalyst for the next phase of cross-asset repricing.