Stocks shrugged and bond yields rose less than 1bps at the longer-end but the dollar and gold are notably moving (higher and lower respectively) as it seems traders are paying attention to “some” FOMC members saying a faster trajectory of rate-hikes may be needed.
A few other participants mentioned that they saw as appropriate a pace of additional policy tightening through the end of 2018 that was somewhat faster than that implied by the December SEP median forecast.
They noted that financial conditions had not materially tightened since the removal of monetary policy accommodation began, that continued low interest rates risked financial instability in the future, or that the labor market was increasingly tight.
Which is exactly what we showed previously…
March rate hike odds jumped from 66% to 73%…
The reaction was instant in the dollar and gold…
The Short-end of the yield curve is seeing yield rise but the long-end is barely moving…
Stocks not impressed yet…
Given gold’s massive outperformance since the rate-hike, we are not surprised at the reaction…
It looks like the longest winning streak for gold since 2011 is over.
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