Dollar Spikes, Risk Slides After Fed's Fischer Seen As "Not Dovish Enough"

It appears the economy is doing just well enough and the reflexive bounce in stocks showing that everything is awesome is all that Fed's vice chair Stan Fischer appeared to need to note that "we are heading [a September rate hike]direction." This has been judged as "not dovish enough" and sparked some turmoil...

Key Fischer points:

1) too early to decide on September but "we are heading in that direction"
2) previously was a strong case for Sept hike but market volatility making things problematic
3) We don't fully understand market volatility
4) "we've got time to wait; we've got to take data into account"
5) Fed looking at 25 basis point increase, hike will be relatively slow

And the reaction is 'hawkish' - USD spike, Stocks/bonds lower, gold down...


and rate-hike odds soar...


And yet the only question that matters, was not asked: how does the Fed hike rates now that China's reserve accumulation is going into reverse, and will lead to dumping of hundreds of billions in Treasurys at a time when the US budget deficit will still need hundreds of billions in funding sources.

In short: the Fed missed its window to hike, and now China has started selling Treasurys, which as we reported previously, is just like global QE, only in reverse.