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...
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FX markets remain the most 'skeptical' as the rest revert from kneejerk for now...
[3]
EURUSD at Low of Day...
[4]
Energy, Tech, and Staples have reverted BUT Financials and Utilities remain near lows...
[5]
charts: Bloomberg