The 13-week T-Bill is moving like a micro-cap again, and taking the TED spread with it.
I realize I have predicted seven of the last two emergency rate cuts, but what the heck, let’s make it eight. Next week is options expiration, so an emergency cut late next week is hereby my prediction.
Incidentally, the Fed Funds Futures are not with me on this. Yet.
Update
OK, I forgot that there is actually a FRB meeting on Tuesday. My gut still says they wait until Wed/Thu to really goose the markets. (A year ago, I would never imagine accusing the Fed of deliberately attempting to manipulate markets. But after the events of the past year, I have come to expect it.)
Why does the fact that options are expiring at the end of next week play a role?
When an option nears expiration, its value becomes more and more sensitive to movements in the underlying. So expiration week is when the most money is made or lost the most quickly in the options market. Such weeks are notorious for market volatility. To send the biggest message, and hurt the people who are short the most badly, you would want to cause a market spike just before expiration. (If you had the power to cause market spikes and were inclined to use it, that is.)