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As said last week…

“Davidson” submits:

The Discounted T-Bill rate has dropped to 3.92%. Should it fall to 3.83%, it will be 0.50% below the current mid-range of Fed Funds now at 4.33% by 0.50% and provide room for the Fed to follow as history demonstrates. Certainly a 025% cut is in the cards but a 0.50% appears likely with another 0.09% drop in the T-Bill.

At current rates, a 0.50% or even 1.00% cut will not have any economic impact to speak of. Borrowing rates are already at levels the US economy has flourished in the past and lower rates while better are not the economic push essential to propel growth. It will have a major market psychology impact. However, many will believe that after having the PMI essentially below 50 the last 3yrs with fear of recession, the psychological impact will prove considerably positive.

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