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With the market’s tepid response to the bailout bill passed this afternoon in Congress, we’ve had our “Eyes” on the 30 Day Fed Fund Futures. We have no doubt that the government will continue to use whatever measures necessary to create liquidity and, by default, attempt to support the stock market. The next tool of intervention is likely to be another cut in rates. Since the passage of the bailout bill, the October Fed Fund Futures contract is trading 98.44. The market is thus pricing in a 100% likelihood that the Fed will cut by 50 bps on Oct.29th and a 24% change of a 75 bps cut.

Daryl Jones
Managing Director
30 Day Fed Funds Futures