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[FOMC Deja Vu] Playing Halveseys For Credit (And Pancakes)

The Federal Open Market Committee cut the federal funds rate another 50 basis points [1] to 3%. It was predictable and the markets were happy as a result of the move.

The WSJ’s always cool Parsing The Fed [2] explains the meaning behind the words. Hint: Housing.

Yesterday investors were betting a 60% probability that the Fed would drop rates [3] another 50 basis points. And the FOMC did not dissappoint.

The prior week’s rate cut seems to be influencing more refi activity [4]. It’ll help affordability in some markets and temper some of the foreclosure activity, but its no panacea for the housing market.

I am wondering when and how the credit markets are going to get “de-spooked.” Is it just a matter of time? or is the economy in need of more action. Its an election year so look for stimulus plans II & III.

The economy is flat as a pancake. [5]