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Dancing their way out

As the conclusions of the last #fomc meeting sink in, the market is already adjusting to the new information provided. The Fed dots, the anonymous way the voting members tell the public where they see rates, indicates the same median point it did in June. The yield curve has steepened by 10 bps between 2Yr and 10 yr, and although it’s still negative (-43 bps), it’s on its path to normalization (positive slope). The U.S. dollar sank after the Fed’s press conference to 101 (DXY), simply because the ECB and BoE don’t seem to be as dovish as the Fed, despite the fact that their economic situation might be worse. Two speeches from Fed governors after the meeting have tried to manage market expectations on Fed rate cuts forecast, signaling they will not rush into cuts. The Fed continues to dance two steps forward, one step back.

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