I guess the 3 mo is showing a flight to safety to say the least. I know people are using this to justify a rate cut but I don’t think a Fed Funds rate cut will solve the current crisis. I saw Kudlow today, probably the most vocal proponent of a rate cut, and somebody pinned him down on this, he basically agreed that a rate cut won’t fix this current crisis but would be a confidence builder for the market. So its only value is symbolic in nature much as the 50 bps cut in the discount rate. I’m beginning to think Ben won’t cut at all but will try something else. The crumbs coming out of the FED right now indicate Ben is very cognizant of moral hazard and is eager to break away from the fabled Greenspan Put. But in a market like this Sept 18 might as well be a year away, there is a whole lot that can happen and most of it is probably bad.
