The FOMC is expected to cut short term interest rates at its upcoming July 30-31 meeting, but they probably will not cut as much as they need to. The FOMC is usually slow to do the right thing. I will repeat the point I have made before, which is that the FOMC ought to outsource the task of setting the Fed Funds target rate, giving that job to the 2-year T-Note yield. It does a better job of describing where the Fed Funds target should be than the humans do. This week’s chart again makes that point, showing how the Fed Funds target rate tends to lag the movements in the 2-year T-Note yield. When the Fed is slow to ... (full story)