Dollar & Bond Yields Tumble As Powell Hints At Bond Purchases

Update (1440ET): When pressed on the actions that The Fed might take to manage year-end 'malarkey' in the funding markets, Fed Chair Powell admitted - as we had pre-warned - that The Fed was open to purchasing coupons (not just bills):

"If it does become appropriate to buy something other than Treasury bills, the Fed will do so. "

This sparked selling in the USD and a bid for 2y notes - exactly what we warned about in October.

Source: Bloomberg

We suspect, if Poszar is correct, that this QE4 (for real) will occur much sooner than Powell thinks.

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The dollar is the highlight among price action following The Fed statement, tumbling back below its Oct 30th pre-FOMC levels. Bond yields are sliding lower also and stocks have reflexively rallied modestly...

A big drop in the dollar...

Source: Bloomberg

And bond yields are sliding...

Source: Bloomberg

As algos lift stocks back above VWAP

With the rate-trajectory signaling no rate-cut until at least Dec 2020...

Source: Bloomberg

But don't forget that the market is still priced notably below the Fed's Median Dot-Plot...

Source: Bloomberg