Financial Markets

Another low volume, sideways day . .  waiting for the Federal Open Market Committee(FOMC) announcement tomorrow Wednesday, April 30.

With inflation clearly picking up, the Fed has to decide whether any more rate cuts are required at this point in time. As Bill Gross(PIMCO) has said, “any further cuts will do more damage than good”. In a similar vein,  Mohamed El-Erian(PIMCO) said a few weeks ago, that “the Fed is using “blunt” instruments to fix a very specific problem and that the market is now looking for a stable federal fund rate or maybe even increases later in the year.

I agree with Gross/El-Erian on these observations.

Currently the federal funds rate is 2 1/4 points and market is looking for another cut of 25 bp tomorrow.

We will see what the announcement brings tomorrow at 2:15pm EST.