By Mark Gongloff at WSJ:
The morning’s lousy economic data have nudged a couple of obscure but noteworthy needles on the dashboard just a little bit lower.First, the fed-funds futures market, where two guys trade bets back and forth on what the Fed’s policy rate will be next year, has cut the chances of a May 2012 rate hike to less than 50%, from a sure thing earlier this year, Howard Packowitz reports. The market is starting to whittle away at the odds of a July rate hike, too, down to 82% from 100% as recently as Friday. Note, however, that this illiquid market is volatile.
Second, Macroeconomic Advisers have trimmed their forecast for second-quarter GDP to 3.2%, down from 3.3%. I’m a little surprised they didn’t cut their outlook more than that, but they’ve got the model, so there you have it. The forecast keeps nudging ever closer to that 3-handle on GDP that many people see as the dividing line between trend and below-trend growth.
