London, United Kingdom (PressExposure) October 01, 2008 -- First Prime Group's analysts are believed to be expecting dramatic global equity market declines to continue for several days. They cite a general lack of direction from the US government and enduring stresses in credit markets for the lack of confidence.
The broad deterioration in market conditions that began with the bankruptcy of Lehman Brothers two weeks ago has exacerbated negative sentiment in credit markets globally according to an unnamed First Prime Group source.
First Prime Group's source said that she had every reason to believe that clients had largely heeded advice to seek safe-haven in commodity ETFs and large blue-chip defensive stocks.
First Prime Group are thought to be expecting that some form of modified bill will eventually be passed but, in the meantime, markets would remain unpredictable as investors moved in and out of equities, commodity and treasury markets.
First Prime Group Believe Fed May Cut Rates.
First Prime Group on speculation Fed may cut rates to restore confidence.
First Prime Group traders are apparently witnessing increased speculation on the possibility of a cut in the Fed Funds rate in the absence of a ratified bailout package from the US government.
The record near-800 point drop in the DJIA following US Congress' rejection of the bailout package has galvanized opinion among market traders that the Federal Reserve may ease interest rates in an effort to reassure markets.
First Prime Group sources believe that if a rate cut is on the cards, it will come during the next few days rather than at the next FOMC meeting in October.
Confidence in the financial system has reached an all-time low and, according to the First Prime Group source, there is a growing possibility that foreign US Treasury bondholders may begin to sell their holdings.
First Prime Group have largely avoided treasuries preferring the safety of commodity stocks and ETFs.