FOMC Delivers With 50/50 (September 18, 2007)

Today was the planned FOMC decision on interest rates and it seems there was a split between those looking for 25 or 50 basis points.  We were in the latter group, or at least that is what we think it will take to smooth things out with added measures down the road (perhaps not in fed funds ahead though).

We got on the 50 basis point cut to 4.75% on FED FUNDS and got a 50 basis point cut to 5.25% on the DISCOUNT RATE.  The markets have initially reacted in favor when you compare NOW to 2:10 PM EST.  The DJIA is now up some 200 points, although we won’t speculate where these end up.

Here is the STATEMENT from the FOMC.

If you’d like to compare how this looks in comparison to the minutes of the August 7 meeting (released August 28), you can link to that here.

Here is a snapshot of where the markets were at 2:10 PM EST a few minutes ahead of the decision:
DJIA          13,478.86; +75.44 (+0.56%)
S&P500    1,485.77; +9.12 (+0.62%)
NASDAQ    2,591.06; +9.40 (+0.36%)
10YR-Bond 4.501% (+0.031%)

This follows today’s PPI release today that was great for the inflation hawk worries, although I have heard more people questioning the data than there are believers.  We also had the weakest homebuilder sentiment reading supposedly in about 20 years.

Jon C. Ogg
September 18, 2007