“Fed Cut the Rate! Seatbelts, please…”

From a reader (not Boomtime, not MarinaPrime, not me, not any of the other bulls…), verbatim:

“Fed Cut the Rate! Seatbelts, please…

* FED CUTS FEDERAL FUNDS RATE HALF POINT TO 4.75%

* FED CUTS DISCOUNT RATE HALF POINT TO 5.25%

* Yield curve steepened dramatically as the 2Y went from 4.13% to less than 4.00%, 10Y yield moved down to 4.46 but has since rebounded a bit

* Future moves will depend on data & economic conditions

* Gold reached a 27 year high as traders hedge against weaker $

* Most beaten-up names will most likely benefit the most (CFC, WM, WFC etc), but their early rally is starting to retreat

* Moves in indices and other asset classes:

BEFORE                                                IMMEDIATELY AFTER

INDU 13478 +73                                         13608 +216

SPX 1485 +9                                                1504 +28

CCMP 2590 +9                                            2619 +91

10Y 4.50%                                                   4.458%

GOLD $717                                                  $722

CRUDE $81.66                                            $81.03

GBP 1.9999                                                  2.0105

EUR 1.3886                                                  1.3940

JPY 115.8300                                               115.52″

-MSNBC Article on the topic

9 thoughts on ““Fed Cut the Rate! Seatbelts, please…””

  1. whatever euros coins you have in your pockets from you last vacations – hold them tight!

    do we actually see more europeans buying in SF when moving here? I do know a few who bought SFH in euros – but none very recently…

    [Editor’s note: Sophie, tu sais que je parle Francais, non? E un po d’Italiano. Und ein bischen Deutsch. You should be sending those friends to me.]

  2. Um, BoomTime & MarinaPrime are the same person. Just FYI.

    [Editor’s note: Well now you’re at least shedding some light on the matter for me.]

  3. Not Blazing – What does it matter, if true? Did he offend you?

    Im new here, but from what i’ve been observing, the real estate market is very strong in SF.

    [Editor’s note: Welcome LintBob.]

  4. Let’s all cheer when jumbo loans drop by 1/2% or more. Not clear that the secondary mortgage market will un-seize anytime soon, but that will have an impact on the housing market. This cut is good for the equities in the short run but if we do have a recession later this year, those gains will be short lived.

    I think it was the right move by the fed but I sure hope we don’t see inflation shoot through the roof.

  5. Only twice in the past 20 years has the Fed commenced a rate cutting cycle by cutting 50bps instead of 25. Both times, the economy went into recession. Here’s hoping that the third time is instead a charm.

    Inflation and the continued descent of the dollar are still a big concern. I don’t really see a 50bp cut as cause for celebration, unless you were already convinced that things were really really bad. The half point cut ought to make you wonder why they felt the need to do that. It’s quite a dramatic step that they took.

    It’s not like being given a glass of wine by the doctor and being told that you’re healthy. It’s more like being told by the doctor that the gash is a lot bigger than he expected, so he’s going to give you twice as much morphine to help get you through the next few days until you recover.

    [Editor’s note: Great comment!]

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