Here is what will happen in 6 weeks

Fed futures will start rising 2 weeks before Fed meeting and by the date rate cut will be priced in for 95%

So Bernanke will cut to prevent market turmoil and meet expectations

It will happen another 16 times every 6 weeks from now

 

A cut will be expected every meeting. the meeting where it doesn't happen will be the day the markets get HAMMERED.

 

Maybe not.

This time they hinted (in fact very clearly) that it is done.

 

We shall see. If Ben & Co wish to avoid the situation you described they will have to give a few speeches during the inter meeting period and make it very clear that they intend to take a break from rate cutting.

 

16 times? Where the hell do these mooks come from?

 

next meeting is in December, do you really think he is going to ruin the year end rally by not cutting rates. The rates will be cut by .25 to 4.25%, its guaranteed 100% that he does it. He should cut earlier than the scheduled meeting. Then the DOW could get to 15k by mid December.

 

Kashirin was limited by fact that 16 more 0.25% cuts brings the rate down to 0.5% - only in Japan, a nation of compulsive savers, is that possible.

I read recently that the maturing US Treasury bonds demaning payment, not willing to "roll", were now exceeding the sales rate. I.e. at the 4.75% FED rate, the US not only had to cover the current deficit, but also in net pay more out. (I.e. issue even more bonds or run the mint's printing presses.) Can any one confirm or refute this?

I think until US population begins to save 4.5% is about as low as it can go, without triggering a run to get out of the dollar. (A rapid-onset sever depression) Foreign holders of Treasury's paper promisees have been net losers on those bonds for some time now, in terms of how much of their local currency they can buy. Almost all would have had better results by just stuffing their mattress with the local currency a year ago than by converting it to buy Treasury paper.

I live in Brazil and am too lazy to get the exact value, but in Brazil's case I think the "mattress stuffers" would be at least 25% better off. It amazes me that central bankers are still dumb enough to buy US Treasury paper, instead of pay off their own local currency bonds etc.

 

it happens faster than I expected

yesterday it was 25% chance to have a 25bp rate cut
and now it's 50%

Probably market will want 50 bp in December

And doesn't matter what Fed says - market wants more cuts and they will get it

 

Not this time they won't. Unless data changes completely.