Here’s an excerpt from Babak’s Trader’s Narrative, on
Bond Market & Fed Funds Rate Together Again, Finally
"The market got spooked today because of the release of the Fed minutes (April 30th meeting) showed a hawkish bent. First, I don’t think the market fell because of that. I’ve been cautious for a while now due to a number of technical and sentiment indicators.
But the reluctance of the Fed to continue cutting may not be a bad thing. For one, take a look at the comparison between the Fed Funds rate and the 3 month Treasury bill rate:
Please go to Trader’s Narrative for chart, it won’t copy here.
It is like the reunion of two lovers (this is as romantic as a trading blog can get). These two financial metrics usually go hand in hand but for far too long there has been a historic dislocation between them. I first pointed this out last summer: Fed should cut rates immediately…."
