A mysterious trader bets on a 50 basis point Fed rate cut, marking the largest block trade in CME federal funds futures history.

According to ChainCatcher, in the Federal Funds futures market on the Chicago Mercantile Exchange (CME), a "mysterious trader" is currently hedging against the risk of a super-dovish surprise in this week's Federal Reserve decision.

According to researcher Ed Bolingbroke, on Monday, the front end of the curve saw the largest block trade ever in Federal Funds futures, involving October Federal Funds futures contracts with a total of 84,000 contracts, equating to a risk exposure of up to $3.5 million per basis point. CME confirmed this trade on the X platform, and it is reported that both the price and timing of this block trade are consistent with buyer characteristics. Given that the current swap market has fully priced in a 25 basis point rate cut, this move may suggest that the mysterious trader is hedging against the risk of a direct 50 basis point rate cut in Wednesday's Federal Reserve decision.