Just minutes before the monthly jobs report was published on Friday, a trader placed a risky bet in federal funds futures that ended up paying off in a big way.

Profits on the position, a sale of the January 2024 contract betting on higher interest rates, were north of $10 million shortly after 10:00 a.m. in New York, following the publication of strong jobs numbers and another report from the Institute for Supply Management that suggested services activity in the US re-accelerated last month. Both releases led investors to price in additional expected tightening from the Federal Reserve this year.

The trade was done via a block sale for 13,996 contracts, equivalent to approximate risk of $580,000 of profit or loss per each basis-point move in the contract. It was placed around 8:15 a.m. New York by a seller, according to traders familiar with the flow.

Profits accumulated on the position as the contract reached a low of 95.405 shortly after the ISM services data came out at 10 a.m., implying a federal funds rate of 4.595% on average in January 2024. That compares with a contract price of 95.59, or an implied rate of 4.41%, when the bet was placed.

Bloomberg analysis of screen volumes suggests that the trade has yet to be unwound as of 11 a.m. The position stands to gain further in value should investors continue to price in additional Fed tightening this year.

Following Friday’s strong data, around 24 basis points of rate hikes are now priced in for the Fed’s next policy meeting in March, up from 21 basis points as of Thursday’s close. For the next two meetings in March and May combined, markets are pricing 40 basis points of hikes, up from 32 basis points Thursday.

This article was provided by Bloomberg News.