Hedging economic recession risks, the options market predicts a significant 300 basis point rate cut by the Federal Reserve within a year

To hedge against the risk of an economic recession, the options market predicts that the Federal Reserve will cut interest rates by 300 basis points within a year. Market participants expect the Fed to cut rates by about 75 basis points, but some investors are starting to increase their bets to hedge against the consequences of tail risks. Data from Morgan Stanley and Goldman Sachs also indicate a dovish stance in the spot market. Although this outcome is unlikely to occur unless the U.S. economy suddenly enters a recession, investors are still monitoring economic data and speeches by Fed officials to look for clues on the timeline for monetary policy easing