The market is kind of in sleep mode. |
The post-auction gains were used as a selling opportunity. |
The yield curve remains steady ... indicating that the upside inflation risk appears to be canceled out by Fed vigilance for now. |
The yield initially knee-jerked lower on the weak durable goods data and the Saudi news. |
There's enough uncertainty about the size of the rate cut to make it a pretty sloppy auction. |
We all anticipated it would come to an end at some point, but we weren't sure if it would moderate or crash. It now looks like it crashed, but that more than likely means we'll see more moderate and realistic growth as people re-apply more traditional methods of financing. That should make the case for moderate, non-inflationary growth in 2000. |
We suspect the FOMC will say that while Katrina had a devastating regional impact, aggregate growth should be only temporarily damped. |
We're going to be getting back to normal, with a lot of the panicky stuff dissipating. We're going to begin looking at the data again and what it means in terms of the Fed. |
What the Treasury has done has caused a significant, permanent shift in the way the curve is structured. We'd seen a lot of subtle changes beforehand but it was the announcement this week that really triggered the earthquake. |