What gives? Back to short covering, I believe - participants were unwilling to sit on overnight positions, what chance sitting on weekend short positions especially with a Fed prone to emergency (read: panic) decisions? And having increased the Term Auction Facility ("Discount Window Lite" - not an increase in liquidity, just availability) shortly ahead of numbers that sucked, who knows? More bleed to come, in that case, with bear rallies custom made for heroes/zeroes. The prospects aren't great for US equity markets (white line) when NFP monthlies (yellow line) run negative, but Asia (orange line), last time around anyway, was boring but OK.---------------------------------------------
Incidentally, if anybody's telling you that the markets are pricing in this or expecting that in terms of Fed rate cuts, they're not necessarily being particularly smart or technically proficient at reading chicken entrails - they just let Bloomberg do the heavy lifting. (I don't use the formula either!) Right now Futures are pricing in a 94% probability of a 75bp rate cut at the March 18 FOMC meeting, up from 68% a week ago... AND it's a virtual 100% certainty (?!) that there will be another 25-50bps at the FOMC at end April too!
NOBODY now seems to be expecting a "mere" 50bp cut on the 18th, which of course means that...
Actually, with the Fed now apparently in "close consultation" with the ECB, BOJ, BOE and others about the inflation stoking weakness of the USD vs inflation vs commodity prices vs the weakness of Europe and Japan in general, maybe 50bps is more likely. (Or at least not a ZERO probability!) Hero time, anyone? Anyone?
Class? Anyone?
Stumble It!
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