Silver Rises Over 120% YTD 
A contrarian view is emerging among bond traders that the Federal Reserve might raise rates in 2025 rather than cut them.
This contrarian position, which emerged after a strong January jobs report, has maintained momentum even after favorable inflation data seemed to reinforce the Fed’s rate-cutting stance. Options markets now show approximately 25% odds of a rate hike by year-end, down slightly from 30% before recent CPI data.
The unconventional bet is largely tied to expectations about incoming President Trump’s policies, particularly potential tariffs and immigration restrictions that could drive inflation higher. Former New York Fed economist Phil Suttle notably predicts a September rate hike, while Vanguard’s global head of rates Roger Hallam suggests substantial inflation surprises could shift market expectations toward rate increases.
This stands in stark contrast to the mainstream view, which has priced in at least one quarter-point cut and a 50% chance of a second reduction. The divergence highlights the market’s growing uncertainty about the Fed’s path, especially given historical precedents of quick policy reversals, such as the 1998-1999 period when the Fed shifted from crisis-driven cuts to inflation-fighting hikes within months.
