U.S. stocks were mixed through most of the session, despite calmer trading in Asia markets overnight, before a relatively uneventful FOMC helped push equities higher. 

Chair Powell's presser offered no strong signal either that an imminent decision on tapering is likely at the next meeting in September: "incoming meetings the committee will again assess progress towards our goals...as we have said we will provide advance notice before making changes to our purchases." Questioned on substantial further progress: "We have some ground to cover … we are some way away."

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He did admit officials had taken a "first deep dive" regarding how scaling back would look but emphasized the need to continue to monitor conditions into future meetings. 

The risk market's initial reaction suggests that the FOMC statement seems to have hit the right balance of hawkishness so far. Nasdaq futures are still up after the statement. U.S. yields are not rising sharply. Fed Chair Jay Powell tried to water down some hawkishness in the statement view in the last press conference. Let us see if he will continue to do that today.

Forex Markets

The Treasury market is calm on real rates but has nudged breakevens higher. That is reflected in the small gain in EURUSD. 

The dollar initially spiked on the initial taper talk, but as Powell sought to play down rates and the eventual inflation outlook, the dollar slides backward. Forget rate hikes in 2022; even on taper, it seems we are still at the start of the conversation.

Since the FX markets are singularly concerned with the FOMC rate hike reaction function, U.S. Dollar bulls could be less enamored on the day but likely more stirred than shaken and are now deferring to this week's backloaded economic data.

Asia Markets

Asia, the beaten-down China markets were offered a lifeline after the government rode into the rescue by meeting with prominent bank executives in an attempt to quell concerns about Beijing's crackdown.

Also, CSRC Vice Chairman Fang on Wednesday conveyed to offshore investors that the education-sector regulations are meant to ensure a strong future for China. All upcoming new policies would be more gradual for markets to digest. Implying no more " shellshock This, along with the PBoC's CNY20 bn net injection, helped risk sentiment rebound, leading to a rally in equities and bonds. NDIRS 1y is -2.5bp at 2.315, 2y -2.5bp at 2.37 and 5y -2.5bp at 2.565.

Oil Markets

Oil advanced to the highest level in two weeks after declining stockpiles of U.S. crude, gasoline, and distillate signaled healthy demand during peak summer driving season. The rebound in implied demand for gasoline and distillates should be music to Oil bulls’ ears, as is the U.S. economic recovery, which remains on track despite the rise in COVID-19 infection.

The question is, what will take prices over the top against the continuation of OPEC tapering and the ongoing spread of Delta Variant. But the lack of follow-through higher on this week's inventory draws it could be a quiet day for crude with the price close to the top end of the trading range as the oil market remains prone to Delta Variant headline risk.

Gold Markets

Gold shook off initial declines to trade higher, as the FOMC at its meeting yesterday flagged lingering risks from the Delta variant of covid. The US job market has continued to strengthen, and higher inflation largely reflects transitory factors. As the Fed continues to assess the economy's progress in coming meetings, Accommodation will remain in place and is a "ways away" from considering raising rates. Still, I'm not convinced this was a gold medal event for the yellow metal