Given the continued strength of the job market and U.S. inflation, options on Secured

Overnight Financing Rate (SOFR) futures indicate a greater likelihood that the Federal Reserve

raise interest rates by a quarter of a percentage point this year and the next.

bond investors use SOFR futures to determine expectations for Fed policy rates

It is common practice, however, to utilize options as a hedge against anticipated movements,

The cost of borrowing money overnight in money markets collateralized by US Treasury