Today's rebound in equities, the drop in swap rates, and rise in T-bill yields are collectively signaling an improvement in the financial climate, although the improvement is obviously quite tentative at the moment. Nevertheless, rate-cut odds have fallen from this morning's levels.
For the Oct. 29 FOMC meeting, the market is priced for 82% odds of a cut, up from 80% Wednesday, but below this morning's peak of 98% odds.
For the Dec. 16 FOMC meeting, the market is priced for 96% odds of a 25-basis-point cut, down from 22% odds that were placed this morning for a 50 basis point cut.
Looking further out, the market is priced for the funds rate to end the first quarter of 2009 at 1.85%.
P.S. Will you be there when Cramer makes his next move?
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Tony Crescenzi Blog Commercial Paper Market Contracts 9/25/2008 11:41 AM EDT The market saw its largest weekly decline in over a year.
Tony Crescenzi Blog Credit Indicators Improve 9/25/2008 1:43 PM EDT Future boosts to the equities market must come from increased confidence.
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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