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agip
RE: Heading Down the Dow

Racket wrote:


agip wrote:


Racket wrote:

GDP coming in just fine at 3.1%.

Low unemployment, GDP solidly rising, and the Fed keeping rates probably unchanged all year. Until one of those things changes then we'll probably stay the same range-bound course all year.


Don't futures suggest an 85% likelihood (or something like that) of the fed dropping rates this year?
I think I saw that. That could kick up the market.


OK I just checked ZQ futures for December and yeah looks like most money is on a rate cute by then. But what's weird is that it's sort of bearish too.

The economy will be so bad (stocks go down)!! that the Fed will have to cut interest rates (stocks go up)!! Or maybe it's an inflation gamble, but at least a few FOMC members have said they might have to let inflation run over the 2% target a bit before touching rates again. No one knows where this economy is going


Seems to me the reason for Fed cut is that inflation will be so subdued that rates can and will fall, even if the economy isn't overheated. So the fed will drop rates to prevent deflation because if that happens we are well and truly F'd.

The rate curve is certainly saying inflation is a dead dog.

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