I'm not buying this rate cut, but the pain I'm taking on my short ZQ isn't exactly thrilling. Best of luck.
I wonder what dynamics are making people bet fed funds even have a chance of getting to 50bp. Seems goofy.
Doubled my short postion this afternoon, but watching it closely. Risking another 0.035 to 95.570. When a trade goes too far against you, you're wrong and there are no two ways about it.
Futher to this -- I'm not so sure there. Taylor rule on forecast core inflation and forecast gdp (vs TTM inflation and gdp) gives a rate of around 4%. I still don't see more than a 25 bp cut though.
I can only imagine this is being entirely driven by the credit market. The bid for mortgagebacks has dropped again, as well as high yield spreads widened the past 2 weeks. The market must perceive that the FOMC will continue to bail out the credit market. But just remember: the first time they cut, oil was in the high 60s and the jobs # was horrid. And the dollar index... well, that goes without saying. We shall see. I'd be a lot more nervous to take this position if equity markets were testing 1370 right now, though.
OK guys. I am bailing now on my short November at 94.460 in after hours for a slight profit. I'm not quite comfortable short thru the meeting when i have a cover opportunity here. For some reason I see this going back to at least 94.5 before the meeting. I stand by my fundamental arguments ... but perhaps I see better risk/reward in other places, considering the fed funds have held at 94.5 and above for a few days. There seems to be a lot of big $$$ conviction against me. Like one of you guys said, admit when you might be wrong.
Ha! Covered myself tonight at 94.455 for a modest profit.. Didn't want to hold through the announcement either. Any idea why we dropped quite a bit in the overnight sesion? Glad it worked out.
Ok, you got me into the trade, I'll follow you out of it. Trying to work my way out at the bid now. I've got a fairly decent profit in it, mostly because I doubled my position near the high. Thanks for the ZQ trade, keep them coming!