Emergency Rate Cut Expected

Please consider the Market is Expecting The Fed to Cut 50 Basis Points Tomorrow Morning

Since January 2001, all inter-meeting Fed moves come between 60 to 30 minutes before the NYSE open. So the market is expecting it tomorrow morning.

Why is the market expecting a 50 bps cut tomorrow? It will be starting a rate-cutting campaign that will take the funds rate under 50 bps by the end of the year (see December 2020 futures above).

Our guess is this market is expecting thousands of positive infection cases in the US over the next month, leading to huge disruptions. Think tens of millions idled from work, school kids home for weeks, if not the rest of the school year.

So, it is penciling in a plunge in Q2 GDP to well into negative territory. It is also possible that March inflections and disruption push Q1 GDP negatively as well.

This market action says it believes a recession is about to begin.

Australia Too


2001 Flashback

Fed minutes show that Greenspan saw it way too late. His fear in 2000 was of overheating.

Important Note

Bianco's call is on what the market expects, not what he expects or would do.

I agree with Bianco's recession observation and the coronavirus disruptions.

We find out Monday morning about emergency cuts but two weeks won't make much of a difference.

A recession is baked in the cake.

Mike "Mish" Shedlock

Fed's 2019 Interest Rate Expectations vs Market's Expectations

The Fed's view of where interest rates are headed in 2019 are quite different from market expectations.

Yield Curve and Spreads Ahead of the Fed Rate Cut Decision

Here is the final snapshot of the yield curve and spreads ahead of the first interest rate cut since 2008.

Fed Makes Surprise Inter-Meeting 50 Basis Point Rate Cut

Fed lowers federal-funds rate range to 1% to 1.25% in its first between-meeting move since the financial crisis.

The Fed Will Cut Rates on March 18

It's now baked in the cake. The Fed will cut rates on March 18 and most likely at least twice more.

Recession Watch: Panic Fed Rate Cuts Coming Up

Fed fund futures say a rate cut cycle has started. The Fed disagrees but will soon come to its senses.

Huge Interest Rate Dislocations: Did the Fed Cut Too Much?

A series of charts shows new fed-sponsored interest rate dislocations. Let's dive into the charts.

Fed Cuts Rates 1/4 Percent, Three Dissents: Dot Plot Suggests No More 2019 Cuts

The Fed cut interest rates 25 basis point to a target of 1.75% to 2.00%. There were three dissents.

Expect Fed Baby Step Cuts Followed by Shock and Awe Panic

The Fed has convinced the market that baby step cuts are the order of the day even as the yield curve screams for more.

Yield Curve Still Inverted Despite Fed Rate Cut

Despite yesterday's rate cut and significant moves higher in long-dated treasury yields, numerous inversions remain.