Several people commented yesterday on the release of the minutes from the August 9 meeting of the Federal Open Market Committee. The Prudent Investor highlighted the usual clause identifying the importance of intervening economic developments on the ultimate outcome on the funds rate. So did William Polley. At Economist's View, Tim Duy takes a contrarian position and projects that "Minutes+Katrina = More Tightening."
Today, that looks contrarian indeed, as the horrific intervening economic development represented by Katrina appears to have softened the sentiment for future funds rate hikes, not so much for September but for November for sure. Thanks to the ever alert Erkin Sahinoz, we have these estimates from the options on federal funds futures:
That was as of the market close yesterday. We'll see how things develop over the week.
UPDATE: Professor Polley takes issue with Professor Duy.