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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (5160)	11/29/2001 1:01:37 PM
From: John Pitera	Respond to of 33421

Tuesday's comments from Fed Gov Meyer turned market expectations toward a Dec policy ease. In a speech to economists the Fed policy-maker stressed that the aggressive Fed easing has been appropriate given the low level of the policy rates and the shocks to the economy. The rationale to ease aggressively rather than keep the ammo dry erased one of the cautions we suspected the Fed was working under. Meyer's insight and his assessment that risks continue to be stronger to the down side thereby opens the door for more easing -- and this comes from the toughest inflation-fighting hawk on the Committee. The repricing of the December funds futures contact now puts the probability at 87% for a 25 bp ease at the Dec 11 FOMC meeting, double the 43% pricing prior to Meyer's speech. Continued ease is in line with our expectations as the Fed typically eases until the labor markets (unemployment, payrolls, claims) show some improvement. The contract pricing troughs at a 1.78% effective rate in February and a rise back above 2% in May.