to work out.
Today, the U.S. economy is under the microscope, and this time its not gonna be easy, we have data on inflation, on housing market, and we have a big fat rate decision to be taken by the FOMC, and it looks like that whatever the feds decides I donÃ¢â‚¬â„¢t know maybe it will still just another failed attempt.
While producers price index expected to increase in a moderate pace for the month of February, following the lead of its consumers' mate, producers prices probably rose 0.4% after a 1% increases in January, while core prices probably increased only by 0.2% after 0.4% in January, and the core yearly PPI expected to come out at 2.1% after 2.3%, all proves that economic slow down is gradually dragging inflation levels, and offsetting the effect of soaring food and energy prices.
Housing starts and building permits will be the envoys from the housing market, both expected to show a decline and a continuation to the deep slump, housing starts are expected to fall to the lowest in 17 years, falling 1.7% to 995,000 unites on an annual pace, down from 1,012 million units in January, while building permits expected to fall to 1.02 million from 1.061 million in January.
The housing slump is still undergoing and nothing can stop it so far, unless people see a huge improvement and a clear sign of a reversal, and some big gestures from the fed who are actually expected to lower rates today a full percentage point trying to save it by the bill, yet, till investors and economists get convinced that this is it, and the current rates are sufficient to bottom up the housing sector and revive economic activities, it is still unsafe to bet on the housing market.
More than 75% of the future trades are betting on 1% rate cut in the fed's fund target rate, while the others are actually betting on 1.25% decrease, which makes any slow move from the fed unacceptable, the fed has learned not to disappoint traders expectations because I think the last thing the want now is to get into a new crash. Economists from the other hand are speculation 0.75% to 1% cut in the overnight lending rate, and I'll be moderate and I will settle on the 1% cut as it sounds like the highest probability.
The targets have changed recently, while a month ago we were seeing the 2.00% or the 1.75% as the ultimate rate that the fed can sink to, and now we actually expect it to happen in one meeting, thatÃ¢â‚¬â„¢s how bad it got in the last month, and no one knows how much worse it's gonna get.
Well, we all learned in the past that with a rate cut stocks climb and currency depreciates, well tonight if the fed meets expectations and lower a full percentage point I think both equities bulls and dollars bulls will be the victors, despite how low the yield on the dollar has got, it is still better than going into a deep dark recessionÃ¢â‚¬Â¦