Bullish Bond-Option Bets Build as Angst Around Powell Subsides

Speculation that President Donald Trump will eventually tap a dovish successor to Federal Reserve Chair Jerome Powell is feeding into a bullish tilt in Treasury options.

Benchmark yields have retreated in the past week from levels reached after reports that Trump was preparing to fire Powell and replace him with someone who’ll reduce interest rates sooner, and perhaps more quickly than the economy requires.

The White House has since indicated the president doesn’t intend to cut short Powell’s term, which ends in May, fueling a relief rally in longer-maturity Treasuries, which had sold off on worries that a near-term rate ...