Another Half-Point Fed Cut Priced In

Mish

The market expects another half-point cut on March 18 and so do I.

On March 18, the Fed meets again. The market implies an 80.7% chance of another 50 basis point cut.

I agree.

Bit of Sarcasm

Deflation Coming Up

The Fed is acting as if it fears deflation. I believe it's baked in the cake.

As noted a bit ago Supply Shock and a Demand Shock Coming Up

Worth Repeating

Deflation is not really about prices. It's about the value of debt on the books of banks that cannot be paid back by zombie corporations and individuals.

That is what the Fed fears. It takes lower and lower yields to prevent a debt crash. But it is entirely counterproductive and it does not help the consumer, only the asset holders. Fed (global central bank) policy is to blame.

These are the important point all the inflationistas miss.

Mike "Mish" Shedlock

Comments (6)
No. 1-3
Tony Bennett
Tony Bennett

Bernanke ... paging Dr Ben Bernanke ...

uh, can we have your instruction manual on this QE contraption?

Lessons that Bernanke learned (the hard way) - Mr Market does NOT like limit on $$s or duration. Massive amount of $$s till forever will do ... or not.

...

You can always count on Americans to do the right thing - after they've tried everything else.

Winston Churchill

Sechel
Sechel

I just bought a ten year AAA muni yesterday. This is to maintain a laddered muni bond portfolio. It's not a new investment but maintaining my duration. Yield of 0.93% And for those saying it's better to wait or better yields that doesn't seem to be happening. That crappy yield I got last year and the year before is looking pretty good right now.

I don't see the Fed lowering rates will have the desired impact, it could do the opposite and communicate panic by Fed officials. What we need is a public display that its OK to engage in economic activity such as going out for a Chinese dinner, seeing a movie or going shopping at the mall. All things that would seem counter-intuitive if one were trying to limit a virus outbreak

I'll be doing an 8 year NY muni soon for the same reason. I'm getting used to paying $1300 to receive $1000 in principal in a few years has long been the norm. Bonds are all issued with 5% coupons because the market wants to avoid duration risk and high coupons are one way of achieving that. We're talking 5% coupons bought at yields of less than 1%

AWC
AWC

So, the Fed cuts the FF to .25, and the curve inverts? Does that mean I will be paid to take out a 30 year mortgage?

Gonna need a whole lot more houses!


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