Nearly 50% Odds of "At Least" 3 Rate Cuts by December

Mish

In the last month the odds of interest rates cuts by the Fed have soared.

June Rate Cut Odds

Rate cut odds from CME Fedwatch.

  • The odds of one cut in June are 44.6%.
  • The odds of two cuts are 29.3%.
  • The odds of three cuts are 5.4%

June Changing Odds

  • A month ago the the odds of No Cut in June were 63.0%.
  • Today they are only 20.7%.

December Rate Cut Odds

December Changing Odds

  • In the past month the odds of two or more cuts jumped from 30.3% to 77.7%
  • In the past month the odds of three or more cuts jumped from 8.4% to 47.2%

What's Happening?

  1. CDC Admits Spread of Coronavirus in the US Appears Inevitable
  2. Lie of the Day: This is Not a Pandemic
  3. Bond Yields Crash and Gold Soars on Pandemic Threat
  4. Fed Minutes Highlight Coronavirus Concerns and Uncertainty 8 Times

Rate cuts odds started rising before coronavirus threat materialized on news Largest Global Shipping Decline Since 2009.

Mike "Mish" Shedlock

Comments (7)
njbr
njbr

And this will help how?

Businesses need material to sell and customers to buy.

There is long term uncertainty as to the effects of "social distancing", supply disruptions, not to mention effects of actual illness--I don't see how rate cuts will negate those effects.

3 Replies

Webej
Webej

We need rate cuts badly. Interest rates are cratering!!!

Snow_Dog
Snow_Dog

Rate cuts will keep zombie enterprises on life support at least through the US election cycle.

Zuckerberg started Facebook as a resource for male students to compare physical attributes of female Harvard students. Today, he has become the de facto czar of social networking.

For their efforts at whistleblowing, Assange is in prison and Rich is in his grave. I’m not expecting a hell of a lot of truth to be forthcoming about Coronavirus. It may have something to do with a particular brand of Mexican beer for all we know.

Stuki
Stuki

Rate cuts will do what rate cuts always do. The only things rate cuts ever do: Redistribute more of whatever wealth/capital/resources are still left, to those who "matter", the ones closest to the credit nexus, The Fed.

Hence, if real growth slows down, or go into reverse, in order to cushion Fed beneficiaries from having to experience losses, those not part of that clique has to have even more redistributed away from them, than they did before. Rate cuts accomplish that. Which is what matters.

In short, it is The Fed's function, to make sure the ones bearing the cost of China's slowdown, are someone other than the "asset owners" it was funded to protect and enrich.

No. 1-3
Tony Bennett
Tony Bennett

Federal Reserve follows / behind the curve ... as always.

Recession baked in already.

China has been - by far - source of marginal global growth past 10 years (ramping your debt $8 trillion ----> $40+ trillion will do that) ... looks like they'll be off line for a while.

Herkie
Herkie

I do hope so, because I am buying a house with my VA home loan benefit, and they have a free one time IRL refi after you owned your house 210 days, it is a free no doc rate adjustment. But here is the odd thing, 30 year mortgage rates are tied to the 10 year treasury and traditionally the mortgage rate was 100+/- a few of that 10 rate. The 10 year just dropped to 1.30% today, but the 30 year mortgage is still up near 3.70% now 240 BP above the 10 year. This is why we have to have GSE's, private for obscene profit banks cannot be trusted not to gouge. Just oil companies cannot be trusted, RBOB is leaving refineries at $1.452 today yet I had to pay $3.699 yesterday for gas in Portland. That is a wildly GROSSLY inflated profit, the markups used to be 10 cents for the refiners, 10 cents to the distributors, and 10 cents to the retailer per gallon. It would appear that the distribution channel is now marking up by more than a buck a gallon. I say time to nationalize those fuckers. Gas would still get marked up as much but at least the money would go to a better place than some filthy rich oil company and its greedy robber barron stockholders.


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