Daily Market Update 9/16/08

Interest rates have been extremely volatile all morning as traders attempt to assess the impact of recent turmoil in financial markets. Mortgage-backed securities’ prices have swung back and forth between positive and negative territory several times in early trading. The Consumer Price Index showed a drop in retail prices for August of 0.1%, although the more closely-watched “core” rate increased 0.2%, in line with expectations. All eyes will be on the Fed this afternoon. The Federal Open Market Committee is expected to announce their decision regarding short-term interest rate policy at about 2:15 PM. Most economists predict a 25 basis point (1/4%) cut in the Fed Funds Rate, although the move is far from certain.

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