Noticed two items on the wire a few minutes ago one noting primary dealers were heavily into the discount window trough (no surprise there) and the second that fed funds futures were pricing in a 50 beep cut at the October FOMC meeting.
Wew have seen the FF futures “pricing in cuts” for many months when in fact no such moves were made but more importantly, the issue is not one of the cost of borrowing funds but rather availability. Anectdotally, I was chatting with an old school chum yesterday who mentioned his daughter had been a commercial lending officer with a major bank in Boston. She was laid off a short while back fter being told not to make any new loans whatsoever. The bank flatly stated they we hoarding available funds for their own use.
Bottom line: I would forget chatter about a fed funds or discount rate cut for now. It would serve no purpose to do so.
