The Fed Freeze Factor

The swamis behind the Fed Futures market are newly tipping the increasing likelihood of no Fed rate change at the upcoming meeting.

I'm totally onside with that view, but am not convinced that the Fed is with us. Like usual, the Fed will almost certainly overshoot, albeit in the downward direction.

Click chart to enlarge.

Comments

[atauber]

if the fed STOPS lowering and the ECB starts increasing then the Doller starts going up whice means that OIL whice is priced in Dollers starts coming down because in starts costing more for the world to buy it whice lowers inflation and lets the ECB to lower more it intrest rates whice brings the Euro lower and pushes the Doller higher whice brings OIL lower.......

[MattBlackman]

Say what??

[buyitcheap]

This commodity inflation and rice hoarding must be having some measure of effect. At the worst a 25 bps reduction and it will be a split vote when the minutes are released. I too would like to see no change. Recent data seems to be supportive of a zero reduction in the FFR. Be long the short and short the long (bonds that is.) But Tricky Benny could also wind up pulling out some other rabbit from his sleeves if he doesn't lower. Like accepting Bbb and lower paper along with the other toxic garbage they got from Bear.

[Coelacanth]

I think either move i.e. .25 point cut to no cut will be interpreted more or less the same. I think the market is pricing in a bottom for rate cuts.

Conversly, it's been funny listening to the ECB hammer away at the "price stability" talk in the wake of Libor rising to 2.9%. Lenders not lending is IMO a bigger problem than inflation at the moment. It won't surprise me at all to see the ECB becoming increasingly dovish in their rhetoric, over the next month or two, as the numbers out of the euro zone become progressively weaker. I think the IFO read out of Germany is giving a hint of things to come.

[flow5]

ataube: it will happen as you say even if the FFR is lowered .25%.

somewhere between the FOMC meeting April 29/30, & May 5, the dollar will bottom temporaily, gold & oil will top temporarily, & stocks might benefit as well.