The mere mention by a Fed governor of what Fed Chair Powell refused to mention during Wednesday's press conference has sent stocks into a minor tizzy this morning, the dollar into serious rally mode, and yet, and fascinatingly, hardly anything in the bond market.
"FED'S KAPLAN: THE FED SHOULD START TALKING ABOUT TAPERING BOND-BUYING SOON."
Again, stocks are taking the mention seriously (although, let's not freak out over a <1% hit):
The dollar, which btw is due for at least a technical bounce, is not taking it lightly either (unlike stocks, a 0.7% one-day move in the dollar is big):
Treasuries, however, as I suggested above, are essentially saying "nah, it's just noise." I.e., any tightening of policy (tapering purchases or raising rates) would send treasury yields -- at this juncture -- through the proverbial roof. Until, or unless, that is, the markets believed that such tightening would actually halt the recovery in its tracks:
For today this is all about fear of less juice for asset markets, as opposed to fear over the status of the recovery...
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