To: $Mogul who wrote (132 ) 7/31/2001 10:17:41 AM From: $Mogul Read Replies (1) | Respond to Fed easing expectations are up today in the wake of the weaker-than-expected readings on consumer confidence and Chicago-region manufacturing. The September Fed Funds contract is pricing in a rate of 3.49%, its lowest rate since June 25 (when the market was still contemplating the possibility of a 50 basis point cut on June 27). At 3.49%, the market is pricing in more than a 100% chance of a 25 basis point rate cut at the Aug. 21 FOMC meeting. However, it still seems unlikely the market will move toward pricing in a substantial chance of a 50 basis point cut in August considering the Fed would probably be reluctant to move back to cutting in 50 bps increments after moving only 25 bps in June. The October contract has dropped to 3.39%, its lowest rate yet. After the June cut, the October contract moved as high as 3.65%. At its current level, the contract is pricing in a little less than a 50% chance of another 25 bps cut at the Oct. 2 FOMC meeting.
