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

To: NOW who wrote (5229)	12/7/2001 3:10:34 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Policy expectations continue to tick higher for Tuesday's FOMC meeting after the sharp decline in Nov payrolls. The turn in expectations took a sharp turn on Nov 27 as Fed Gov Meyer opened the door for more aggressive easing given the level of interest rates. At that point the market priced in less than 50% odds for a Dec 11 ease. Now the market fully prices in a 25 bp ease and small 18% odds for another 50 bp. There's no market turning economic data released between now and the FOMC meeting but an expected 2.8% decline in next week's retail sales (downside of auto sales spike) report will make the Fed look foolish if they don't ease.