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Strategies & Market Trends : The Amateur Traders Corner -- Ignore unavailable to you. Want to Upgrade?

To: Tom Hua who wrote (10451)	6/8/2001 1:34:27 PM
From: $Mogul	Respond to of 19633

FED TALK: The market continues to price in a 100% chance that the Fed will cut rates to 3.75% from 4.00% at the upcoming June 26/27 FOMC meeting. The July Fed Fund futures contract is trading at 3.735%, little changed from 3.74% at Thursday's close. At that level, the contract is pricing in a 100% chance the Fed will cut rates by 25 basis points at the June 26/27 meeting and about a 5% chance of a 50 basis point move. The September Fed Funds contract is trading at 3.675%, down from 3.68% Thursday. At that level, the contract is pricing in about a 1-in-3 chance the Fed cuts rates by another 25 basis points by the August FOMC meeting. That also may be factoring in some chance that the Fed cuts rates by 25 basis points in June and another 25 basis points prior to the August meeting, due to the two-month lag between meetings. At the March FOMC meeting, Fed officials considered cutting rates by 75 basis points but instead opted to go 50 bps and hold a conference call prior to the May meeting because of the two-month lag between meetings. Similar reasoning could prompt a 25 basis point cut at the June meeting since the Fed would still have latitude to cut another 25 bps if necessary in July.