On the eve of the U.S. presidential election, Fed funds futures are pricing in an 83.4% chance that the Federal Reserve will cut rates by 50 bps at the next FOMC meeting on Dec. 16.
In a note to clients, economists at Capital Economics wrote that regardless of the outcome of the election, the next president will inherit a "poisoned chalice of an economy entering a deep and prolonged recession and a soaring budget deficit that will rapidly reach levels not seen in a generation."
Dr. Jörg Krämer, chief economist at Commerzbank, writes that the weak performance of recent economic indicators points to a recession.
"The Fed cut interest rates twice in October by a total of 100 basis points, taking the key rate to only 1.0%. It is likely to leave the rate at this low level for quite some time due to the recession. The Fed might even cut rates one more time."
All Data taken at 3:00 pm EST.
By Steve Stecyk and edited by Sarah Sussman
©CEP News Ltd. 2008