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October 31, 2005

Funds Rate Probabilities: Marching Toward 4.5

Mark Thoma already relayed the news -- no surprise to anyone -- that the market absolutely knows another 25 basis points are coming when the FOMC meets tomorrow.  So you need not sit down before taking in this picture of market expectations (based, as usual, on the Carlson-Craig-Melick estimates derived form options on federal funds futures):


November_13


December and January are a bit more interesting.  The reticence to bet on 25 basis points again-again-and-again, which appeared to be building ten days ago, faded right away last week:


December_5


January_2


To paraphrase the most recent survey of bond traders from Bloomberg (via Economist's View): The end may be in sight, but it is not near.

For the faithful, the data:

Download implied_pdf_november_102805.xls
Download implied_pdf_december_102805.xls
Download implied_pdf_january_102805.xls
Download Imp_pdf_slides_for_blog_102805.ppt    

October 31, 2005 in Fed Funds Futures | Permalink

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Tracked on Dec 11, 2005 10:01:08 AM

Comments

The fed fund rate increase to 4 percent will be last rate increase for some time. Kindly visit the Economic Fractalist...

1 November 2005 Update

52/130/130 Maximum Daily Growth Fractal Completed.


Like a plane that has gone off the radar screen, the venerable Atlanta
based superairliner Delta Airlines, formerly DAL, no longer has a
valuation tracing on Big Charts. Delta, Northwestern, GM, Delphi, and
Ford all share the commonality that, unlike the badly run corporate-like entity
known as the United States, they cannot directly tax present day and future day
citizens to maintain the current questionable promise of their substantial outstanding
debt instruments. These private organizations must depend on bottom line profitability in a disequilibric competitive global economy to maintain the promise of their debt instruments,
their pensions, their health care benefits, and ultimately their economic viability.
The nonlinear reality of bankruptcy or imminent bankruptcy and the imminent death
of these formerly world class and solid companies serve as canaries in the coal mine for America's future global economic viability.

The nonlinear mechanistic imminent fractal decay of equities and asset valuations is, with great probability, at hand. 31 October 2005 completed or nearly completed a maximum growth fractal sequence of x/2.5x/2.5x or 52/129-130/129-130 days dating from August
2004. A lower high exhaustion gap so technically characteristic of
dying markets making their lower highs occurred on 31 October for the
NASDAQ. Before falling back at the close the Wilshire TMWX, likewise,
showed minutely exhaustion gaps to lower highs in the last hour of
trading.


The final decay daily fractal equity sequence will likely either be a
6/15/15 or a 7/17/17 sequence, the former starting 3 days ago and the
latter starting 4 days ago. (The other possibility is a splitting of
the difference with a 6 plus/16/16 decay sequence as alluded to in the
previous EF posting).

One other less likely, although nostalgic solution, is an exact
replay of the 1929 11/27/27 decay fractal sequence. The count on this
possible sequence is: 11/19 of 27/27. This has some appeal because
maximum growth in the second decay fractal would be a fib ratio of the
base, i.e., 1.62 x11 = 18-19 days.

All of these fractal decay solutions end in 31 to 35 more trading days
for completion of the primary decay fractal.

A corroborative litmus test in the next few days for the coming equity
devolution could be an expected decline in TNX and TYX, the ten year
note and 30 year bond respectively, even as the fed fund rate is
raised (albeit, very temporarily) to 4 percent. Exiting money from
equities, will flow into the debt market, lowering interest rates.
Likewise, three month treasuries IRX 'struggling' to match the 4
percent fed fund rate because of the money exiting from equities will
also provide early evidence that the devolution is in its beginning
stages.

Just like the formation of galaxies and hurricanes and nautilus
shells, the universe of the macroeconomy operates through non stochastic fractal
growth progression and nonlinear decay. Expect the unexpected.
Gary Lammert http://www.economicfractalist.com/


Posted by: gary lammert | November 01, 2005 at 05:35 PM

Yes, the December is more interesting. The strategy used there must have been different from the other months.

Posted by: Richard Davis | September 27, 2012 at 05:59 AM

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