Forex Investment and Currency Trading

The FED cut the FF rate by 0.75% to 2.25% yesterday. The spread between 2-year yields and the FF rate factored into the market had widened to about 1.7% at the beginning of the week in what was a very unusual situation, so the current measures were to correct being behind the curve. Even though 2-year bond yields rose yesterday, the level had fallen to the lowest levels of 2003, when the FF rate was at 1%, and the market is concerned about this trend being revisited. The current action involves a reduction in the spread to about 0.7%, with future falls factored into the market.