Why was the lowering of the fund rates so powerful?

Discussion in 'Trading' started by aaronk321, Aug 17, 2007.

  1. We're were headed for at least 3% + downfall today based on the futures market and then wham the fed came in to save the day
  2. cause econ growth is slowing=rate cute
  3. gnome


    It's mostly psychological. Mindset of, Fed's got your back, so go ahead and pay "any price for any thing".
  4. Toro KMA

    Toro KMA

    It is psychological. The discount rate is virtually meaningless but there were worries that the Fed was going to stand aside and not do anything. The move today was a signal that the Fed wasn't going to let this happen.

    There were problems in the inter-bank and money markets. The Fed's job is to facilitate transactions within these markets. By making the cut today, they signaled they will do so.
  5. Didnt the fed say last week that they would only cut rates if it was crisis, or something to that effect? What they have done today is like shouting fire in a crowded theatre. I would guess the market will edge upwards slowly for the next few weeks ( give the old boys club time to get in a few weeks at the hamptons and saratoga). and then collapse will continue. just a thought. i think that we are dangerously close to entering a period of deflation.
  6. LT701


    why was it so powerfull?

    it's like giving a crack whore a hit off a crack pipe
  7. Basically, the bloodbath isn't over. We were given a band aid to cover the bullet wound.
  8. haha. true. who wants to deal with this crap in august? :p
  10. They say beark market rallies are the most powerful of all market moves.

    This is because you have a combination of buying and short covering.
    #10     Aug 18, 2007