Global Rates: Trick or Treating with Central Banks
The desk highlights the ongoing volatility in the derivatives markets driven by central bank actions, particularly as we approach key policy decisions. Per the full note source, Ipek Ozil and Khagendra Gupta emphasize that market participants are grappling with the implications of recent rate hikes and the potential for further adjustments. The commentary suggests that traders should brace for continued fluctuations as central banks navigate inflationary pressures and economic growth. With no immediate high-impact events on the calendar, the focus remains on the evolving central bank landscape and its influence on market positioning.
What the desk is arguing
J.P. Morgan's Ipek Ozil and Khagendra Gupta discuss the recent and upcoming central bank developments and their impact on derivatives markets. The podcast, recorded on 31 October 2025, implies a focus on rate path uncertainty and derivative positioning as key themes.
Where it sits in our coverage
We have no internal coverage on the specific currencies mentioned (none), so we cannot provide a consensus or firm spread.
How other firms see it
No other firms are cited in the source commentary.
Key takeaways
- 01Central bank developments remain a key driver for derivatives markets.
- 02Podcast recorded on Halloween, suggesting a cautious or 'trick-or-treat' outlook.
- 03Focus on US and European interest rate derivatives strategies.
Market implications
The commentary may reinforce expectations of volatility in rates derivatives as central banks navigate monetary policy decisions. Traders should monitor upcoming central bank meetings and adjust positions accordingly.
Risks to this view
Unexpected central bank actions, such as rate hikes or pauses, could disrupt current market pricing. Data dependency remains high, and geopolitical risks may complicate the outlook.
Hello, and welcome to At Any Rate, J.P. Morgan's global research podcast, where we take a look at some of the drivers behind the biggest trends and themes across fixed income, currency and commodity markets. I'm Ipeka Ozil, head of U.S. interest rate derivative strategy at J.P.
Morgan, and today I am joined by my colleague, Kagan Ragupta, head of European interest rate derivative strategy. We are recording this on October 31st, and our comments today are based on our published research available on J.P. Morgan markets.
So Kagan, thanks for doing this Halloween special podcast with me today. And I'm going to do my best to keep Halloween related puns to a minimum. And of course, that's with the exception of the title of our podcast, which is trick or treating with central banks.
So you know, we had the FOMC, BOJ, BOC and ECB meetings this week. So it was a very central bank heavy week. And next week, we have the Riksbank, BOE and the Nordiskbank meetings.
And of course, these meetings will have or have already had implications on our markets. Hi Ipek. Yeah, you know, I'm also looking forward to this Halloween special and hope that our comments don't really spook our listeners.
Now, of course, amongst all these central bank meetings, the FOMC was quite a cracker, or maybe, you know, I should say quite a pumpkin. I think we're already doing pretty well with the puns. Okay, so maybe I'll get started with the FOMC and then we can go from there.
So the FOMC cut the funds rate by 25 basis points and announced an end to its balance sheet runoff or, you know, quantitative tightening effective December 1st. And none of this was all that surprising. So our economists and the markets were pretty much expecting a 25 basis point cut in this meeting.
And we had revised our QT timeline and we were expecting QT to conclude at the end of this month. So what was surprising was actually the dissents, right? There were two dissents this time around, one for a larger cut and actually one for keeping the policy rates on hold.
And additionally, four reserve banks submitted requests for no change in the discount rate, which could indicate that, you know, there were already some second thoughts about cutting rates when core inflation is still close to 3%. Actually Dallas Fed President Laura Logan just said this morning that she was, she didn't want to cut rates given high inflation. And you know, additionally, there were no changes to the administry rates or to SRF or there was no mention of starting temporary open market operations.
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