Buy T-bond futures now as a potential move for September's interest rate reduction is being considered
The current forecast for U.S. Treasury bond futures (ZBZ25), the December 2025 contract, is bullish. This optimistic outlook is primarily driven by market expectations of two Federal Reserve interest rate cuts this year, including one potentially in September.
The December 2025 Treasury bond futures are showing a rising trend, recently touching a three-month high. A breakout above the August high resistance level of 115 27/32 could open the way for further bullish momentum, with an upside price target around 120 or higher. The support level is identified at 114, which can act as a protective stop for traders.
The weak U.S. jobs report for July has heightened expectations for two U.S. interest rate cuts by the Federal Reserve in 2025, including one as early as September. Typically, lower rates increase the value of fixed-income securities, supporting bond prices. This trend is evident in the increasing optimism and demand seen across Treasury futures markets as traders position themselves ahead of anticipated Fed policy easing.
Options-related volatility and Greeks data are also being tracked but do not currently contradict the bullish price momentum.
However, it is essential to understand commodity futures and options contracts and one's obligations when entering into those contracts. Individuals should understand their exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents provided by their broker. Before investing in futures or options contracts, individuals should consider their financial experience, goals, and resources, and be aware of the potential for losing more than their initial payment to a broker.
The Commodity Futures Trading Commission (CFTC) advises that trading commodity futures and options is volatile, complex, and risky. Trades discussed in the article are hypothetical in nature, and it is up to the reader to decide when and if to initiate trades and determine the size of any trades.
The author, Jim Wyckoff, does not manage any trading accounts other than his personal account. On the date of publication, Jim Wyckoff did not have positions in any of the securities mentioned in the article.
This bullish outlook for ZBZ25 in September 2025 underpins the potential for a buying opportunity on more price strength.
[1] Data sourced from various market analysis reports and economic indicators. [2] Greeks data and options-related volatility information obtained from various market analysis tools and reports.
- The increasing optimism and demand in Treasury futures markets, driven by expectations of lower interest rates and Fed policy easing, might provoke some investors to contemplate investing in this sector, particularly in technology-driven financial industries, as they seek profitable returns through bond investing.
- With the bullish trend in Treasury bond futures and the anticipation of two interest rate cuts by the Federal Reserve, some technology-focused investors might find it compelling to allocate funds towards finance-oriented technology solutions that leverage artificial intelligence or big data analytics to optimize their investments and capitalize on the rising potential of the U.S. Treasury bond market.
