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

To: Tom Hua who wrote (11218)	6/27/2001 12:39:44 PM
From: $Mogul	Read Replies (1) \| Respond to of 19633

June 26-27 3.64% 100% odds of 1/4 point cut 44% odds of 1/2 point cut. FED TALK: If the Fed decides to cut the fed-funds rate by a quarter of a point, they are likely to accompany that move with a statement that clearly indicates an inter-meeting rate cut is a distinct possibility. Langauage similar to that seen in the Fed's March 20th policy statement, which hinted at the surprise rate cut that was delivered on April 18th, would likely be inserted. Here is that statement from March 20th: "In these circumstances, when the economic situation could be evolving rapidly, the Federal Reserve will need to monitor developments closely." If the Fed decides to cut rates by a half point, there will likely be language that indicates the pace of rate cuts will slow going forward. But they will indicate this delicately, to avoid giving the appearance that the rate cut cycle is complete. A shift to neutrality would undoubtedly hurt the equity market and lead to a widening of credit spreads and therefore cannibalize the Fed's half-point cut. The Fed must therefore leave the door open for more, albeit less so than if they cut rates by a quarter point.