Yes, I know it doesn’t sound like a rational thing to say, “bad is good”. However sometimes markets are not fundamentally rational but more technically motivated. So, when was already clear that investors would cheer any FED rate cuts, the disastrous non-farm payrolls number last Friday was a golden parachute, because it basically means an open road for Powell and his buddies at the board to speed things up.
Photo by Sharon Mccutcheo.
The dovish entourage is so enthusiastic that the FED funds futures are already pricing the possibility of not one, but three rate cuts this year, with a almost certain first move in July and with 25% probability of the cut coming in around ten days time, at the next FED meeting, which is the exact opposite of the scenario painted by the biggest central bank in the world last October, when its program included three rate hikes for 2019. So, keep an eye on the U.S dollar for the next few months, lower rates and lower economic growth, will probably pressure the greenback.
