Tuesday, September 16, 2008

Rate Watch 9/16/08: Cautiously Floating

Up until today there really was not a worry that the Fed would cut the Fed Funds rate at their meeting today, but with the dire circumstance of near Bankruptcy of AIG (an insurance company operating in 160 countries!), the Fed may cut the rate by .25% to .50% today to give a calm in the the face of a storm. If this happens, bonds will not like this because of the inflationary pressures that it puts on bond prices. Stocks are retreating early in trading and is helping Bonds stay at the flat line, to slightly off, since the markets opened. Stay tuned, I may be reversing my recommendation to Lock this afternoon after we see what the Fed does with the Discount Rate. This really is a wild ride we are on right now!

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