My how things change.
- A month ago there was allegedly a 10%% chance of a rate cut tomorrow with an additional 22.3% chance of a 50 basis point cut.
- Last week there was a 92.3% chance of a single cut.
- Yesterday there was a 62.3% chance of a cut.
- Today there is only a 47.3% chance of a cut.
Tomorrow we see.
Questions of the Day
- Rate Cut on the 18th?
- Did this sudden change amplify today’s liquidity crisis?
Rate Cut Question
Rate Cut Odds Dip Below 50% from 92% a Week Ago
Will the Fed Cut Rates Tomorrow?https://t.co/8XtsYPVb0Y
— Mike “Mish” Shedlock (@MishGEA) September 17, 2019
Liquidity Crisis Question
Did the dramatic change in rate cut odds this week amplify the liquidity crisis today?https://t.co/8XtsYPVb0Y
— Mike “Mish” Shedlock (@MishGEA) September 17, 2019
For discussion, please see US Overnight Interest Rate Surges to 10%, Fed Injects Emergency $75 Billion.
Mike “Mish” Shedlock
Given the higher reserve requirements that were put in place 10 years ago, how can they lack liquidity now? Off balance sheet liabilities?
I have consulted the royal ouija board, I have tossed the sacred bones of chance, I even traveled to the oracle on the top of mount who-gives-a-damn … the message is clear. Central banks are all pushing on a string
Please ask your sources “how long can they push on a string?”
The oracle of Dell Phi Beta Kappa says: ‘As long as they get paid to do so.”
Well, Japan is now in their third decade of achieving nothing. They seem oblivious to their failure. Investors are still losing money betting that this latest round of fiscal stimulus is going to be different, but it isn’t.
BoJ officials get paid whether their plan works or not.
CME’s Fedwatch tool is being skewed by this week’s jump in the EFFR from 2.14% to 2.25%. Bloomberg’s tool still shows 100% odds of a cut tomorrow. There’s a thread on Twitter discussing this, I posted the link here but that comment isn’t showing up (I guess due to link-detection block). Search@iv_technicals on twitter for it.
Does it actually make any difference what the Fed does? A quarter point or even a half a point in rates can’t be the difference between growth and recession?
I guess it might tell us what the Fed thinks is happening and going to happen but haven’t they been awful at forecasting? Does anyone base investment decisions on what the Fed says or does?
Rubber Meets Road Time
No cut should boost $US … exacerbating EM problem of getting $US to meet bond obligations (denominated in $US) … as global economy cools.
Only a matter of time before something somewhere blows up.