Bond Market is Trick Or Treating at the Fed

WSJ:

Federal-funds futures used by traders to wager on monetary policy show markets pricing in a 94% chance of a cut this week, CME Group data show.

Peter Boockvar:

Putting aside what I think the Fed should do this week (nothing), I can’t remember one time that the Fed stood only on its own thoughts and not the markets. With the bond market pricing in a 90% chance of a cut, I’m sure behind closed doors there is a lot of ‘we can’t disappoint the markets.’ How fitting the week of Halloween when the kids are screaming for their candy. This all said, if the Fed’s message remains ‘mid course adjustment’ and/or ‘insurance’ in defining these cuts, then at least for now they will likely message they are done for a while.

Will we get that sweet, sweet candy? Depends on whether the Fed is “data dependent” as it says or “market dependent” as I’ve been saying.

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