Market Pricing in 100% Chance of Rate Cut in March - 50bps

Quick update here on the state of the market.

The FOMC futures for March 18th are currently pricing in a 100% chance of a rate cut, with a 95% chance of a 50 basis point cut.

I warned that we would see a strong central bank response, and it appears we are going to get just that.

This comes amidst a recent move in Hong Kong to award it's citizens with 'helicopter money' to alleviate the impact of Covid19.

"Hong Kong permanent residents aged 18 and above will each receive a cash handout of HK$10,000 (US$1,200) in a HK$120 billion (US$15 billion) relief deal rolled out by the government to ease the burden on individuals and companies, while saving jobs."

I will be watching the market very closely, because this could either fizzle out and the sell off continues, or the flood of liquidity could propel markets to new highs.

The major catalyst will be news surrounding the spread of Covid19, should we see community level infection in the US, i could easily see the markets begin to buckle under the pressure.

https://www.cato.org/blog/handouts-helicopters-hong-kong-dollars-hogwash

https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html