Rate cut odds ratcheted up today, possibly because of the uncertainties surrounding the prospects for fiscal stimulus, but likely also because of the continued weakness in equities prices.
The market is priced for 72% odds of a 75-basis-point cut at the Jan. 30 FOMC meeting, up from 44% yesterday. The market is priced for 100% odds of 100 basis points in cumulative cuts by March 18 and 46% odds of 125 basis points in cuts, up from 84% odds of 100 basis points in cuts and 0% odds for 125 basis points in cuts.
For the April 30 FOMC meeting, the market is priced for 100% odds of 125 basis points in cumulative cuts and 48% odds of 150 basis points in cumulative cuts (a 2.75% funds rate), up from 82% odds of 125 basis points in cuts
and 0% odds of 150 basis points in cuts.
For the end of 2008, the market is priced for a 2.375% fed funds rate.
P.S. Will you be there when Cramer makes his next move?
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Tony Crescenzi Blog No Democrats Were There 1/18/2008 11:53 AM EST The crowd at President Bush's press conference did little to convince the stimulus package is here.
Tony Crescenzi Blog Fed's Window for a Rate Cut Is Closing 1/18/2008 11:21 AM EST Any cut after 2 p.m. today and before the next meeting would smack of panic.
Tony Crescenzi Blog Toss the University of Michigan 1/18/2008 10:43 AM EST The results seem upbeat, but taken in larger context, don't seem to reflect current seniment.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market,
first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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