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FOMC Market Reaction - Yields Flatten, FX Market Not Buying Equity 'Hope' Reversion

Tyler Durden's picture


The knee-jerk reaction was very clear - selling pressure on both US equities and gold as no mention of NEW QE disappointed and no language change per se to indicate its imminent arrival. No rate extension droive the front-end of the Treasury curve higher in yield and the curve is flattening as 30s and 10s outperform and 2s underperform. EURUSD dropped 60 pips to 1.2240 as USD strength was across the board. Commodities are broadly lower as USD strengthens BUT gold and stocks are rebounding back towards unchanged from pre-FOMC now. As we post, only the USD seems to be holding its change as Gold, Stocks, and TSYs have retraced the immediate reaction - though stocks looked like a trickle up to VWAP so be careful. 

  • Pre: 10Y 1.4950, ES 1376, DXY 82.7, gold 1603, IG 105.75, HY 97.25, HYG 91.39, WTI 88.81
  • Post: 10Y 1.51, ES 1374, DXY 83.1, gold 1600, IG 105.4, HY 97.28, HYG 91.42, WTI 88.85

IG credit is bid and HY not so much.

ES jerked down and then reverted up to VWAP and is fading now...

FX markets remain the most 'skeptical' as the rest revert from kneejerk for now...


EURUSD at Low of Day...


Energy, Tech, and Staples have reverted BUT Financials and Utilities remain near lows...


charts: Bloomberg

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Wed, 08/01/2012 - 14:39 | 2669715 Squishi
Squishi's picture

at this point I just want war.

Wed, 08/01/2012 - 14:42 | 2669734 SilverTree
SilverTree's picture

No dude, you don't. :-)

Wed, 08/01/2012 - 14:56 | 2669789 CVfriendship
CVfriendship's picture

War is Hell.

This is just life.

Wed, 08/01/2012 - 15:00 | 2669795 SilverTree
SilverTree's picture

This was just a quick punt to Ol'Draghi. Hot-potato!

Wed, 08/01/2012 - 15:03 | 2669806 The Monkey
The Monkey's picture

Ha ha ha! Fed does nothing. Market doesn't tank.

Better look out for the ECB! One of thes banks is going to be printing and it's not the Fed!!!

Wed, 08/01/2012 - 15:05 | 2669816 SilverTree
SilverTree's picture

If one prints they all print. Race to the bottom bitchez!

Wed, 08/01/2012 - 15:18 | 2669878 Jake88
Jake88's picture

Believe me. Draghi will save the day. NOT!

Wed, 08/01/2012 - 14:42 | 2669731 Hype Alert
Hype Alert's picture

They are going to kick the can so far down the road, they hope you don't hear it when they stop.

Wed, 08/01/2012 - 14:42 | 2669733 Satan
Satan's picture

Equities are doing that hoping/praying thing for a BIG announcement at Jackson (Ass)Hole later this month...

When did equities become the dumb money?

Wed, 08/01/2012 - 14:45 | 2669736 LawsofPhysics
LawsofPhysics's picture

Metals down, "market" flat - mission accomplished.  Not my own words, but damn true. Credit goes to fonzannoon for calling this one.  The owners of the Federal Reserve Bank thank you.  Their paper lives another day.

Wed, 08/01/2012 - 14:48 | 2669759 fonzannoon
fonzannoon's picture

Thanks for the credit man. I wish it were for something more virtuous.

Wed, 08/01/2012 - 14:55 | 2669785 LawsofPhysics
LawsofPhysics's picture

nothing changes until there are real consequences for bad behavior (this would require or current elite to indict themselves - not gonna happen).  Moreover, the "markets" will be whatever the central planners want them to be from now on.  The only "unforeseen" thing that could end this would be suppliers/manufacturers of real commodities, goods, and services deciding to stop delivery on contracts and demand more paper or something more real in exchange.  This is when the real shooting starts.  Until then, volitility is a day trader's best friend.

Wed, 08/01/2012 - 14:58 | 2669792 fonzannoon
fonzannoon's picture

To your point I wonder when the mining companies are going to stop taking bats to the head and start demanding higher prices. Not sure if that is what you mean but it has to roast those guys nuts to look at Amazon's earnings and see their stock price while these guys mine real assets out of the ground while wall street tells them they suck.

Wed, 08/01/2012 - 15:16 | 2669842 LawsofPhysics
LawsofPhysics's picture

I was thinking more along the line of the economic sectors I know, agriculture and energy.  Nothing gets done (ergo no economy) without the products of this labor, and the technology/effort of many people who actually deliver these products is underappreciated, big time.

Wed, 08/01/2012 - 14:43 | 2669737 Dr. Engali
Dr. Engali's picture

It's like watching paint dry....I wish something would fucking happen.

Wed, 08/01/2012 - 14:46 | 2669748 Hype Alert
Hype Alert's picture

I'm starting to think there are so few people left in the market the machines can pretty much paint it any way they want.  Hard to make any sense out of it otherwise.

Wed, 08/01/2012 - 14:46 | 2669751 BeetleBailey
BeetleBailey's picture

Holding my EUR/USD short @ 1.2150......dammit these fuckers............BRING IT!

Wed, 08/01/2012 - 15:20 | 2669885 Jake88
Jake88's picture

that's pure gambling dude. you'll go broke in no time.

Wed, 08/01/2012 - 14:48 | 2669753 youngman
youngman's picture

I farted......that was my reaction

Wed, 08/01/2012 - 14:48 | 2669756 buzzsaw99
buzzsaw99's picture

not bullish. zirpfinity was already priced in.

Wed, 08/01/2012 - 14:54 | 2669781 geewhiz190
geewhiz190's picture

off topic comment, but ZH should take a look at Energy Future Holdings. they reported today.  could be enroute to a 40 Billion dollar bankruptcy. 

Wed, 08/01/2012 - 14:55 | 2669787 fonzannoon
fonzannoon's picture

I am going to go out on a limb here and say the NFP is above 110k Friday. Prior month revised UP. By next week everyone on TV screaming QE in September is guaranteed will be yelling recovery and no QE needed as of now.

Wed, 08/01/2012 - 15:07 | 2669828 rubearish10
rubearish10's picture

Likely the reason for no action today????

Wed, 08/01/2012 - 15:21 | 2669892 Satan
Satan's picture

Indeed. Without a doubt the Fed got a look at tomorrow's numbers...
NFP tomorrow will come in at or better than consensus...

Wed, 08/01/2012 - 15:04 | 2669810 Everybodys All ...
Everybodys All American's picture

The market is broken.

Wed, 08/01/2012 - 15:07 | 2669826 Mugatu
Mugatu's picture

Market does not know what to do.  It today's fucked up market, bad is good and good is bad.  Entire market is so fucked up that it cannot figure out what to do with this report.  

Now the pressure is on Draghi to see if he gives the Bundesbank a big fat blow job and gets them to back off. Unless he puckers up, this market can't be jaw-boned higher.

Wed, 08/01/2012 - 15:11 | 2669846 Everybodys All ...
Everybodys All American's picture

The market reflects nothing more than the central planners deciding the closing prices.

Wed, 08/01/2012 - 15:16 | 2669864 orangegeek
orangegeek's picture

Euro falls, US Dollar bounces back today.  Longer term outlook for the US Dollar is to the upside.



Wed, 08/01/2012 - 15:16 | 2669865 Satan
Satan's picture

Tomorrow might be a good day for Draghi to call in sick!

Thu, 08/02/2012 - 01:46 | 2671222 SAT 800
SAT 800's picture

I got a good laugh out of that. "laughter is the best medicine"--according to the Reader's Digest.

Wed, 08/01/2012 - 15:25 | 2669905 Snakeeyes
Snakeeyes's picture

yield curve rises, all eyes switch to Super Mario.

Dr Bernanke as Dr Evil: How about NO!


Wed, 08/01/2012 - 15:58 | 2669949 MachuPicchu
MachuPicchu's picture

Let´s see what Draghi says tomorrow..

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