So “dovish” it was, or at least “dovish” was the market’s read on the Fed statement.
The language on the outlook for inflation was timid and “relatively soon” on the balance sheet gives them an out if they end up needing it.
“The post-meeting statement noted that the Committee expects to begin balance sheet normalization ‘relatively soon,’ likely implying an announcement at its next meeting on September 19-20,” Goldman wrote after the release.
“The FOMC set the stage for a September announcement of an October start for tapering its $4.5t balance sheet,” Stone & McCarthy Research Associates’ Terry Sheehan said, adding that the “a balance sheet policy change could be delayed if it looks like an increase in the debt limit is not immediately forthcoming and with it the risks of U.S. default on its sovereign debt.”
The Dow put up a nice gain thanks almost solely to Boeing. Everything else, mehhh.. not so much:
Yields fell, reversing course after rising on Tuesday:
The VIX did this just as the Fed decision crossed:
The dollar plunged as the Fed came across as cautious on the outlook for inflation.
Oil hit an 8-week high, buoyed by EIA data which largely confirmed yesterday’s bullish API numbers, jitters about Venezuela, and promises of a cap on Saudi exports.
“The primary driver behind the rally is that you’ve got more inventory draws,” Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, which oversees $142 billion of assets, said on Wednesday afternoon. “The market has essentially been hoping and hoping for inventory draws, so that’s a good thing.”
Here’s what “a good thing” looks like:
The euro surged to a 2 1/2-year high following the Fed statement, finally breaking through the August 2015 1.1714 peak:
European shares were mostly higher on the day ahead of the Fed…
