Rate Cut Odds Dip Below 50% from 92% a Week Ago

-edited

The market has given the Fed a free swing as rate cut odds dip to 47%.

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

  1. Rate Cut on the 18th?
  2. Did this sudden change amplify today's liquidity crisis?

Rate Cut Question

Liquidity Crisis Question

For discussion, please see US Overnight Interest Rate Surges to 10%, Fed Injects Emergency $75 Billion.

Mike "Mish" Shedlock

Comments (11)
No. 1-8
Sechel
Sechel

manufacturing and production rebounded in august. that kills the rate cut

Sechel
Sechel

Fed injection had to do with banks being caught with their pants down and not being liquid...again

thimk
thimk

mr long bond has been overcome by goldfinger.

Tony Bennett
Tony Bennett

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.

Matt3
Matt3

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?

Crosis
Crosis

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.

Country Bob
Country Bob

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

Akjr
Akjr

Given the higher reserve requirements that were put in place 10 years ago, how can they lack liquidity now? Off balance sheet liabilities?