Just at the market began its torrid ramp higher today at 11:15 am on the dot, something else was expected to happen: the Fed's open market buying, or POMO, of Agency MBS (yes, those still continue despite the end of QE because the Fed has to keep the level of its balance sheet flat and offset maturities).
Only today this did not happen. Instead, this is what the NY Fed said:
Wed, February, 24, 2016
Due to technical difficulties, the Wed, February, 24, 2016 (11:15 – 11:45am) agency MBS outright operation was cancelled. The operation will be rescheduled for a later time. Please continue to check this website for updates.
Perhaps as dealers were expecting a fixed income bid from the Fed at exactly that moment, one which didn't come, they instead had to square of unhedged delta positions by selling rates, which in turn ignited the risk on algo complex which drove a furious momentum ignition across the ES,CL, USDJPY space?
As Bloomberg writes, there has been no explanation what the "technical difficulties" are, however it is somewhat perplexing that just as the POMO was supposed to start, what happened instead was a surge in 10 Year yields, the USDJPY and, of course, the S&P 500 which has wiped out more than half the day's losses in minutes.
But the ignition can only last so long...
We doubt the Fed wil have an explanation for that either.