Monday, April 21, 2008

Fed may be almost done cutting rates

Federal funds futures are now indicating a high probability (96% chance) that the Federal Reserve FOMC will make only a single quarter-point cut at the next FOMC meeting at the end of this month, and a high probability (82% chance) of no additional cuts this year, and a coin-flip (56%) chance of a quarter-point hike (after the April cut) by the end of the year.

In short, the futures market is suggesting that the Fed is likely to make one last small "insurance" and confidence cut this month, and then people are expecting that May will be the start of a turnaround for the economy.

-- Jack Krupansky

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