Today on CNBC, the network interviewed two ex-Fed Governors at the same time for routine commentary ahead of tomorrow's FOMC decision on rates. The interview just ended about 2:20 PM EST. Former fed governors Alfred Broaddus (ex-Richmond) and Robert Parry (ex-San Francisco) both commented that they would expect the next rate move to be a hike rather than an ease. No specific timeframe was given and inflation and equilibrium were both noted as higher than recent the more comfortable trend.

One metric CNBC posted was that The Financial Times says 40% of fund managers expect a hike in next six months. This was more targeted for 2007 than 2006, and no specifics were given other than a "trend."

Just yesterday PIMCO's Bill Gross, the big daddy of the bond market, was saying rate cuts would be necessary in 2007. One needs to recall that ex-Fed governors are not as widely tuned in as the markets think and they often get current predictions wrong. That isn't meant to discredit the statements made at all, but it should at least be kept in mind. But based on these calls in a Gross versus ex-Fed Governors, one has to be right and one has to be wrong.

This "next move is higher on rates" also was not targeted at all toward tomorrow's FOMC decision on rates, but you may see some play in the farther months' Fed Fund Futures since you had two former Fed governors discussing this simultaneously.


Jon Ogg is a partner in 24/7 Wall St.