Bonds Getting Utterly Smoked
Abstract
The market made it through yesterday's Fed announcement in deceptively sideways fashion as far as bonds were concerned. It was a confirmation of a hawkish Fed that won't care about the economy until it sees actual damage, and even then, only if that damage coincides with the expected drop in inflation. Perhaps even more important than Powell's message during the press conference was the takeaway from the Fed's dot plot. The dots are the thing! Powell simply didn't say anything in the press conference to suggest markets take the dots with a grain of salt. In other words, the market was already positioning defensively for yesterday's Fed, but reality suggested traders didn't go far enough. There is an extremely frustrating absence of new, individual, obvious market movers in play this morning. That fact belies the size and ferocity of the selling spree.