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from the perspective of market expectations, tonight will undoubtedly be the most exciting fed interest rate meeting night in the past decade. as expectations that the fed is expected to cut interest rates by 50 basis points at this meeting have rapidly increased in the past few trading days, a large number of market participants have also bet on the fed's potential big moves. this poses a serious risk:

if fed officials "unexpectedly" choose to kick off the easing campaign with the standard approach (a 25 basis point rate cut), fixed income traders who have made record-breaking bets could face huge losses.

the number of open contracts for october federal funds futures, which investors use to bet on this week’s federal reserve rate meeting, has jumped to its most extreme level since the derivative was launched in 1988, according to data compiled by the industry.

andmost of the new bets are that the federal reserve will cut interest rates by 50 basis points this month.the surge in related positions so far this week has been particularly significant, with new positions accounting for almost a third in the past two trading days.

in futures markets tied to the secured overnight financing rate (sofr), a new large trade also emerged during monday's trading session, with trading targets similar to bets that the federal reserve will cut interest rates by 50 basis points this month.