The Market Reacts To (Then Reads) Janet Yellen's Speech

Tyler Durden's picture

Out of the gate - based on the fact the word "slack" was present and the word "bubble" was not, stocks ramped higher as J-Yell's J-Hole speech hit. Bond yields surged (led by 5Y) and the USDollar also surged (as gold shrugged). However, once the machines were done, humans reacted to the fact that this was not the "full dovish" speech that was 'priced in' and have started to sell stocks back... but then again - we always have Draghi later to save Friday...

 

Just asa we warned... JPY 104 was hit and that sparked the momo run in the S&P - but it seems there were fewer stops to run than machines hoped...

 

Uh Oh!!!

 

Stocks pump and dump.. and then high beta levitates...

 

Then gives it back...

 

as bond yields surge along with the USD...

 

Bonds having an ugly week - especially the short-end...

 

Credit is less exuberant...

 

And some initial comments from Reuters:

MOHAMED EL-ERIAN, CHIEF ECONOMIST AT ALLIANZ, NEWPORT BEACH, CALIF.:

Federal Reserve's Janet Yellen speech "reinforces two messages that were signaled in Wednesday's FOMC minutes: first, a less dovish tilt overall in the thinking of Fed officials. And second, significant differences in their thinking when it comes to the details of when and how high to hike interest rates."

WAYNE KAUFMAN, CHIEF MARKET ANALYST AT PHOENIX FINANCIAL SERVICES IN NEW YORK:

"I think everyone knows Yellen is a dove, and that she would rather err on the side of caution. I agree with her. Investors are really in a sweet spot, the economy is improving and central banks are not going to let the global economy fall into another recession. Yellen is going to lead the way on that.

"There aren't any surprises, so the market activity is very normal. We may consolidate a little, since we got a little overbought, but any pullback would be a buying opportunity. People on the sidelines are missing out on a great bull market. We could hit 2,000 on the S&P at any minute, but my sights are much higher than that. It would take a huge event to derail this rally."