US Treasury options traders have divergent views on the Fed's interest rate path, focusing on the tone of the Powell press conference.

Options traders' views on the recent interest rate path of the Federal Reserve are becoming increasingly divergent, with various bets pointing in different directions, ranging from betting on a rate cut in the coming months to differing degrees of rate hikes. Pricing in the swaps market indicates that the Federal Reserve's decision to maintain interest rates on Wednesday's meeting is almost certain, and all eyes will now turn to Chairman Kevin Walsh's first press conference for clues on future policy. Despite the United States and Iran preparing to sign a temporary peace agreement, oil prices have fallen to a three-month low, providing some relief on inflation pressures, but future policies remain uncertain. "Ahead of this meeting, there is a lack of market confidence because, for the market, Chairman Walsh is still relatively unknown," said Mark Cabana, head of U.S. interest rate strategy at Bank of America. Cabana added that market pricing "well reflects the various opinions currently existing."