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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: michael97123 who wrote (41229)	1/2/2001 1:10:03 PM
From: michael97123	Read Replies (1) \| Respond to of 70976

Tuesday January 2, 1:00 pm Eastern Time Fed funds futures seen pricing in FOMC inter-meeting move By Melissa Goldfine CHICAGO, Jan 2 (Reuters) - Federal funds futures at the Chicago Board of Trade are pricing in a high probability of an interest rate cut from the Federal Open Market Committee before its next scheduled meeting on January 30-31, market participants said Tuesday. Based on the January federal funds contract, the odds have gone up to 40 percent from 33 percent late last week that the Fed will cut the overnight bank lending rate to 6.25 percent from 6.50 percent before January 31, said Kim Rupert, senior financial economist at Standard & Poor's. Jon Jacobs, fixed income analyst at IDEAglobal, said the January fed funds contract is pricing in a 62 percent probability that the Fed will make an inter-meeting cut by Friday, when the U.S. employment report for December is released. ``It's fully pricing in a (25 basis point) ease no later than the middle of the month,'' Jacobs said. At 11:30 a.m. CST (1730 GMT), January fed funds were up 7.5 basis points at 93.630, the session high. Federal funds futures added to gains after the release of the National Association of Purchasing Management index for December, which came in weaker than expected. It was the fifth consecutive month the index remained below 50, which indicates a contraction in the sector. The market already fully expects a 25 basis point easing from the Fed by its January meeting, and February fed funds now are pricing in roughly a 70 to 80 percent chance that the fed funds rate will be 6.0 percent by the FOMC meeting, 50 basis points below the current rate. Despite the market price action, Rupert said she expects the Fed to cut rates by 25 basis points in January and another 25 basis points in March. ``That's based on our expectations that the economy is not in the dire straits that some people have projected and that we don't have a financial seizure that would precipitate an inter-meeting move,'' Rupert said.