It's Fed Day! And that means the Fed will release its interest rate decision and policy statement later this afternoon. Currently, the Fed Funds Rate stands at 1%. But, indications are that the Fed will cut by .50% or .75%.
In other news today, Consumer Prices dropped more in November than any other month on record, due in large part to falling gas and energy prices. Based on these numbers, inflation is almost non-existent and could shift thinking towards fears of deflation. Also today, housing starts for November came in at their lowest level since records began in 1959, and building permits were reported at record lows.
So far this morning, Bonds have improved, but have struggled to gain too much ground. The tame inflation numbers and the dismal housing numbers should have sparked a better reaction in Bonds, but traders are cautious ahead of a Fed Rate cut, which historically hurts Bond prices. Therefore, I recommend floating for now, but be prepared to lock this afternoon.
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