Matt from Queens

The Dollar Index and the Financial Sector

As far as lowering borrowing costs are concerned, it's fairly evident that monetary policy by itself is not the answer to de-leveraging, therefore it's doubtful to see the Fed reduce rates further.

To paraphrase a wonderfully clear explanation by Paul McCulley from PIMCO, the paradox of de-leveraging is resulting in further asset-price declines, reinforcing the negative feedback loop. The root of all this is the decline in home prices, the asset upon which all this leveraging was built, so without a stabilization in home prices the de-leveraging process will continue.

Lowering borrowing costs further is not likely to mitigate this problem and therefore, it isn't likely to see another rate cut from the Fed.