The rate on 13-week Treasury bills has fallen to 3.27%. The Fed funds rate stands at 4.75%.
The two rates have always moved close together. They diverge in times of crisis as in 1998 and now. Reason: the Fed is slow in recognizing and understanding the problems.
This time is no exception. Implications? The Fed will be forced to a implement a major reflationary program and much lower short-term interest rates.
This is good news for the financial markets.
More on http://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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