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

To: Tom Hua who wrote (14489)	10/3/2001 10:34:42 AM
From: Shadowed	Respond to of 19633

9:08 AM FED TALK: Fed Fund futures are almost fully pricing in another 25 basis point rate cut at the Nov. 6 FOMC meeting. The November contract is currently pricing in a rate of 2.31%, down from 2.33% at Tuesday's close (and 2.415% at Monday's close). An effective Fed Funds rate of 2.5% (the current target) through Nov. 6 and 2.25% through the rest of the month would result in an average for the month of 2.30%. In other words, a 25 basis point cut is fully priced into the November contract at 2.30%. Strictly speaking, a 2.31% rate in the November contract prices in a 95% chance of a 25 basis point cut on the 6th. However, the odds are probably somewhat lower than that because of the lingering possibility that the Fed will need to inject extra liquidity into the system as it did in the days following Sept. 11, which would lower the average effective Fed Funds rate for the month. The market also continues to move toward pricing in additional easing after November. The February 2002 contract, for example, is trading at 2.11%, suggesting a little better than a 50% chance that the Fed cuts rates to 2.00% by the January 29/30 meeting.