However, the implied probability for a minimum 50 bps Fed rate cut for the Dec. 16 FOMC meeting remains fully priced in.

As the CEOs of the 'Big Three' U.S. automakers presented their restructuring plans to Congress in order to secure a $25 billion federal loan, sales figures released today showed November was the worst month in history for the automakers. Vehicle sales at the 'Big Three' were down between 31% and 47% in November compared to a year earlier.

In a press conference held to discuss U.S. automakers' request for funding, U.S. House Speaker Nancy Pelosi said Congress will make some kind of decision after reviewing U.S. automakers' plans. Pelosi said bankruptcy is not an option and that a short-term loan would be a more suitable course of action.

Economists at Goldman Sachs are expecting one last rate cut from the Fed at the year-end meeting.

"We expect the FOMC to lower its funds rate target by a final 50bp at the December 16 meeting, the final cut for this cycle," they wrote. "At either this or the subsequent meeting on January 27-28, the FOMC might indicate that the funds rate will stay low for an extended period of time, in a bid to lower long-term Treasury yields."

Meanwhile, St. Louis Fed President James Bullard told Bloomberg News that more Fed rate cuts could lead to deflation. Bullard cited the "self fulfilling" deflation that Japan suffered from during the 1990s.

By Steve Stecyk, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Sarah Sussman, This email address is being protected from spam bots, you need Javascript enabled to view it

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