Quote:
Originally Posted by 2000cs
From a major bank this afternoon:
“ Ø Swap curve is pricing significant Fed easing into the forward curve (87.5 to almost 100bps of additional Fed easing in 2020)
Ø Fed Cut Probabilities March 18th meeting: 100% for 50bps, 17% for 75bps
Ø Fed Cut Probabilities April 29th meeting: 72.4% for 25bps (assumes 50bp cut occurred on March 18th)
Ø 1M LIBOR forward curve pricing in .47% LIBOR in Sept of 2020
Ø Given what we have seen from central banks over the last 10 years I think it is safe to say that central banks will ultimately throw everything and the kitchen sink at the situation if needed to help avoid a significant economic downturn (may need to pull non-traditional levers)”
Looks like rates may fall more.
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I really hate the panic cut. We've had health scares before and the market has gained over 10% from the max drawdown in the subsequent 12 months each and every time. I would be utterly stunned if we saw another cut, of any magnitude, on the 18th. It's not like a rate cut is going to get people out to movie theaters, sporting events, and shopping malls.
As I've mentioned before, banks already have a massive backlog to clear before they feel even remotely incentivized to drop their rates.