Hot market – Nov. 25, 2008
After a record one-day trading range of more than 7 full points into uncharted territory, can T-bond futures go any higher?
- Bond futures go up as interest rates go down, but with the Fed funds rate already at 1%, can the Fed drop interest rates lower again at its next meeting Dec. 16?
- Would another drop in interest rates resolve the financial and credit crisis anyway?
- To buoy the economy, the government will remain under pressure to rescue the auto companies and other sectors where new revelations of trouble keep surfacing.
- Bailout funding for banks, brokerage firms, insurance companies – and possibly others to come – means huge government spending, huge deficits and almost certainly higher inflation rates . . . and higher interest rates?
- A VantagePoint bond futures chart shows a big runup to record levels (1) since the long moving average crossover Nov. 6, but there are hints the upsurge may be ready to turn as the rise in the predicted medium-term moving average (blue line) appears poised to weaken, the predicted differences have turned lower (2) and the predicted neural index is at 0.00, bearish indications.
