[$5 Trillion Rate Hike Bet Collapses: Federal Reserve Holds Steady, Largest Rate Trade in History Reverses] BlockBeats News, July 31 — The Federal Reserve maintained interest rates at 3.5%-3.75% during its July meeting, leading to a rapid unwinding of large-scale hedging positions previously built around rate hike expectations. Data shows that open interest in August federal funds futures contracts once surpassed 1 million for the first time in history, involving approximately $5 trillion in nominal principal. Following the announcement, CME data revealed that open interest in these contracts decreased by approximately 140,000 contracts, reversing the net short positions that leveraged funds had been steadily increasing. The price of August federal funds futures surged, turning rate hike bets into losses. Previously, the market had pushed the probability of a July rate hike to nearly 50%, but as the new Federal Reserve Chair Kevin Warsh refrained from signaling a rate hike, related trades quickly cooled off. [Original Link]