Thursday, August 30, 2007

Fed rate cut

Money is again rapidly flowing into the 3 month T-bill. As we can see in the past this has been followed by a cycle of Fed rate cuts. The last week this strong flow of money into T-bills was a sign of fear as investors wanted out of riskier assets and into safety. The last 2 days so far the market has been strong so I'm of the opinion that the market is seeing a rate cutting cycle ahead. Apparently the market thinks this will be a positive for the economy and stocks. Well either that or the credit markets are bracing for another round of selling and the stock market doesn't know what it's doing.