Fed Fund Futures React to Statement
You can read the 10,000 articles that will be written over the next few days. Or, if you're like me and need see a picture of something to understand, you can look at the Fed Fund Futures Curve. To be honest, you could tell me something a hundred times while beating me over the head with it, and it won't be until you actually show me that I will finally understand.
So, what just happened?
This is what the Curve looks like today:
This is how it looked yesterday.
This is what they said to accomplish that:
"low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.”
It's that simple folks. And the stock market likes it. Why? Because as Cullen Roche over at Pragmatic Capitalism put it, "Just 24 hours ago the curve was a full 25 bps higher than today. This move was the equivalent of a rate cut. Unfortunately, rate cuts stopped working about 2 years ago…."
Check out how different the curve looked in June
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