US Rate Cuts
25 basis point cut is already factored into the market. I think Bernanke will err on the side of caution and go for a 25 basis point cut. You never know, I was talking to a couple of bond traders who work for First National Bank and they had an interesting and different take on 50 basis point cut. They think a 50 basis point cut at one shot could throw the market in a tizzy, the market could take it as a signal that good ol' Bill does think the market is in a credit crunch and needs a bail out. Oh! the mad mad world of investing…….
Pasting from another forum…..Hello All:
I just wanted to do some research and confirm what ElliotWave.com site
is saying.See the attached 3 month T-Bill chart, and you will see it from
barcharts.com Based on this, which seems to be a no-brainer, it looks
like it is confirming that the Fed Funds Futures is predicting the
correct move. I am sure the Fed Fund Futures is also trading in
similar patterns to the 3 month T-Bill rates, hence it is able to
predict a 50bp cut.KKP's Personal Opinion: A 50bp cut would be a huge cut for the US.
This means that if Bernanke cuts 50bp, it will not be looked upon as a
HUGE POSITIVE (2x as good as a 25bp cut). If he cuts 25bp, and then
indicates that there is more to come from his goody-bag, then it will
become a huge positive, and the markets in the US will take off,
proving the Election year cycle in 2008.http://customer1.barchart.com/cgi-bin/mri/vsnchart.htx?page=chart&sym=TBY00&data=E&showcc=yes
What do you guys think? And, more importantly, how will this impact
BSE Sensex and Nifty? Should we be making any big moves here?KKP
Princely Mathew wrote:
> Hello,
> I saw the following graph on the elliotwave webpage and thought it was great.
>
> The corelation is remarkable - So a rate cut for the next fed meeting should
> almost surely come based on this. And it should be atleast 50 basis pts.
>
> Lets wait and see….
>
> The full article:
> http://www.elliottwave.com/features/default.aspx?cat=mw*aid=3336*time=pm
>
> Thanks,
> Princely Mathew
> __._,_.___
