Goldman Trader: Despite "Overwhelming Govt Force", Market Will "Maintain Pressure On Smaller" Banks

A disappointingly drab performance in stocks today (S&P -5pts), hid the main event where 2Y yields collapsed (over 13 standard deviations from the norm - equivalent to an 8ft 9in man) as expectations for The Fed's much-jawboned hawkish rate-trajectory were eviscerated by 'financial system concerns'.

Volatility (in stocks and even more so in bonds) is considerably elevated from last week with the S&P's vol term structure showing a significant rise over last week, and dramatic uptick in the short-term ahead of CPI and FOMC (as well as the fact that today's FHLB funding was super-sized to $88.7 billion (from an initial $64 billion) suggesting 'bank runs' are not slowing)...