There will be no Fed rate cut

But are the expected returns higher?

 

basis how do you count?
sep trades now at 94.995
0% 50 bp
98% 25 bp
2% 0 bp

 

the price is a future price based on all days in september - it is not based on the ff target at the end of Sep. learn the contract specs.

 

There should be no rate cut but of course we all know there will be a 25 BP cut. If there is no rate cut today DOW 13250 will surely be here by 4pm today.


The crying bulls are hoping for something. Only catalyst left for them is a rate cut.

 

I still think it's completely insane to cut with oil and gold prices at new records, with the market skirting it's highs.

Total madness.

 

Sep settles into the AVERAGE EFFECTIVE OVERNIGHT rate. The target has nothing to do with actual settlement. So far in September we have 17/30 days with an average rate of 5.06. The implied average rate for the month from the futures price is 5.01 (assuming 94.99 last).

5.01 = (rest of month rate * (13/30)) + (5.06 * (17/30))

rest of month rate = 4.945

Assuming no tracking error, and that only a 25bps or a 50 bps cut are possible, that's basically a 20% chance of 50 bps, and an 80% chance of 25 bps.

October is a better month to look at... but then you have to start assigning probabilities to an intermeeting cut....

 

And the crooked wall street bankers have been bailed out again.

 

Do u feel like a douchebag now?? You should. Never say never.

 

Not difficult to see this coming. There was a 100% chance of a 25 bp cut and a 75% chance of a 50 bp cut (FF futures market).

As I said before, the bond market was the "tell" and it was screaming for a 50 bp cut.

Check out the long term chart of the Fed rate and the 90 T-bill rate to see how the fixed income market leads the Fed by the nose.

 

More after-the-fact analysis from the resident ET buffoon.