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Interest Rates

Bond Market Volatile Ahead of Fed Announcement

Posted 09/18/2019 10:03AM CT | Greg Perlin

Today shapes up to be a volatile one with the Federal Reserve widely expected to lower rates .25% with the announcement coming at 1:00 PM central. The market is expecting it and is currently priced in. The real market mover should be what Powell says in his press conference.  Do they state that they see more rate cuts ahead? Or will todays expected cut be more of an insurance cut meaning the economy is still doing well, but we are cutting to keep pace with the rest of the world?

Many presume Iran was behind the attack on oil fields in Saudi Arabia this weekend, and investors bought up crude and bonds as safety and stocks sold off. Yesterday, the move in crude reversed as oil pipelines are scheduled to get back on line quicker than anticipated, and bonds lost the initial bid that was seen Monday morning. Economic data in the past few weeks has weakened a bit, but not enough for the Fed to continue a path of constant reduction of rates, even though the world economy is at a critical level where many of the world’s economy are near or at recession levels. Traders should be on their toes this afternoon as the announcement on rates comes out. However, more important than the announcement of rate cuts is what Powell says afterwards.

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Greg Perlin

Senior Market Strategist
Greg is a former Chicago Board of Trade member. He was an independent floor trader, pit broker and floor broker with Cantor Fitzgerald. Some of his clients included traders from Morgan Stanley and Lehman Brothers. He also acted in the capacity of desk manager for the morning trade desk. Greg was part of the elite Lind Plus Division for 10 years before joining RJO Futures in 2011.
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