Thursday, April 24, 2008

Fed almost done cutting rates

Federal funds futures are now indicating a 100% probability that the Federal Reserve FOMC will not make more than a single quarter-point cut at the next FOMC meeting at the end of this month, a high probability (80%) that the Fed will make a single quarter-point cut, a high probability (96% chance) of no additional cuts this year, and a reasonably high probability (70%) chance of a quarter-point hike (after the cut next Wednesday) by the end of the year.

In short, the futures market is indicating that the Fed will almost certainly make one last small "insurance" and confidence cut on Wednesday, and that people are expecting that May will be the start of a turnaround for the economy.

-- Jack Krupansky

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