2 year yields overlay with DXY index correlation looks high over last 2 weeks. Dolalr pricing in lower fed funds rate
News Driving Stocks higher and Yields lower
*G7 FINANCE MINISTERS PLAN CALL TUESDAY TO WEIGH VIRUS RESPONSE “The thinking in the market is that the call will end with central bank rate cuts and commitments to fiscal stimulus from G7 officials. ” Aggressive rate cuts being priced plenty of room for disappointment
G7 FINANCE MINISTERS EXPECTED TO HOLD A CONFERENCE CALL ON TUESDAY OVER MEASURES TO COUNTER CORONAVIRUS OUTBREAK – SOURCES
IMF AND WORLD BANK SAY STAND READY TO HELP MEMBER COUNTRIES ADDRESS HUMAN, ECONOMIC CHALLENGES OF CORONAVIRUS
“Congressional Source tells me there are discussions between Sen Chuck Grassley & the rest of the Senate Finance Committee about tax relief if Coronavirus starts to severely affect US economy. Those discussions starting now”
What is priced into fed funds? Current rate is 1.58% so with that in mind look at the Circled Column this is expected policy rate at each upcoming Fed meeting. By march markets expect fed funds rate to be below 1% which would indicate 2 rate cuts by then ,December implied rate is .575% almost 4 rate cuts being priced by then. A bit aggressive I say and thus plenty of Scope to be disappointed by central bank action.