Markets are now pricing an above 50% probability (well above) for a 50bp FOMC rate cut on Wednesday.
Consider:
1. Is the FOMC going to think that if they don’t cut by 50bp it’ll trigger huge financial market volatility?
2. Or is the FOMC behind it all, drip feeding info to bond insiders to provide cover for a 50bp cut?
The higher I see this 50bp pricing rise the more I am leaning towards 2. I have been persistently at 25, but am getting rattled. How much can a koala bear?