Crazy day in the market today with wild swings up and down in bonds as investors seek profits and are motivated with the economic news today that except for cars retail sales last month slumped and employment numbers are down again following last week's numbers.  The news stokes the speculation of the Fed cutting the discount rate next week--and therefore the Prime Rate--since there would appear to be some motivation from national economic numbers and not just the motivation of politics and psycology. 

 

Because of the now overwhelming majority sentiment that the Fed rate cut will take place the speculation now centers on how much, a quarter percent? a half?  Going into Tuesday's meeting we are seeing some run up in rates, or reduced decline on some days, as stocks are reacting very favorably to the possible/probably cut and investment is flowing into stocks and not bonds.  Today however it looks like a yo-yo as investors bid bonds way up to open, then sold off to crash them and have bought back to neutral on the day--a lot of commissions being generated for the traders today.  Expect more of the same next week as movement continues in front of the Fed on Tuesday and then in the days following as everyone tries to figure out what the ramifications of any move (or non-move).