FOMC Unanimously Leaves All Policies Unchanged, Launches Forward Guidance

Since the last FOMC Statement on November 5th (right after the election and as the vaccine headlines hit), stocks have screamed higher led by inflation-sensitive small caps...

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Source: Bloomberg

But it is Bitcoin that has really screamed higher (up36%) since the November Fed (with Gold, the dollar, and bonds all down around 2-3%)...

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Source: Bloomberg

Bond yields spiked in those first few days (Fed, fiscal, vaccines, etc), but have largely trod water since (as the yield curve is at its steepest of the year)...

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Source: Bloomberg

Financial Conditions have dramatically eased in the weeks since the last Fed meeting, smashing financial conditions to their easiest in US history...

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Source: Bloomberg

And don't forget that the dollar is suggesting confidence in Powell's magic is waning (as is Bitcoin)...

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Source: Bloomberg

Surging COVID-19 case counts, renewed strain in the labor market, and floundering fiscal negotiations - all amid a backdrop of Treasury yields grinding toward the highest levels of the pandemic - are compelling reasons for Fed officials to stand ready to do more., so the big question for today is, will they hedge and enable some easing (extending WAM on purchases) as StanChart suspectsand/or will The Fed hike its IOER, or will The Fed leave well alone at these stratospherically rich levels - merely promising to do something at some point in the unknown future?

The headline is simple - NOTHING CHANGES, EVERYTHING CONTINUES

Central bank officials left rates near-zero at their December meeting and tied bond-buying to their employment and price goals.

“The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time,” Fed officials reiterated in their December policy statement, released Wednesday afternoon.

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