While Wall Street sells off and Congress implements the Bailout Bill, Wall Street players are changing their expectations for the Fed Funds Rate going forward. 

Thing is, there's a complete uncertainty about what the Fed is going to do. 

In fact, there's a complete uncertainty about everything and lack of conviction on Wall Street leads to manic behavior.  It's why stock markets sell-off huge one day and rally the next.  It's also why mortgage rates are as volatile as they've ever been.

Using the chart, we can actually look back over the last 60 days and visually track how markets sentiment has changed.  2 months ago, we worried about inflation.  Today, we worry about recession.

The green line indicates a "no change" in the Fed Funds Rate from its current 2.000 percent level.  As the green line moves towards the top, it indicates the market's changing belief that the Federal Reserve will leave the Fed Funds Rate as-is. 

30 days ago, that expectation was 83 percent.  Today, it's 18 percent. 

Also worth noting is that 0.750 percent is now in-play.  Markets put a 21 percent chance of that happening.  This would be the lower than the 1 percent Fed Funds Rate level that supposedly sparked the 2005 bubble.

Irrespective of what actually happens after the Fed's next meeting, the chart does give us a good glimpse into the Wall Street Psyche.  If nothing else, we see that markets are unsure of what's coming ahead, and that's causing record volatility.

If you're thinking of floating or locking a rate right now, the chart's randomness may be reason enough to consider locking in.  Floating a mortgage rate carries a lot of risk in a market climate like this one.

(Image courtesy: Federal Reserve Bank of Cleveland)

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.