The UST 10YR Yield is getting smoked after Fed Chair Janet Yellen takes a toke of the dovish peace pipe, keeping the “patient” word in, and acknowledging what she cannot reverse (#Deflation in all reported inflation metrics). In other words, her acknowledging deflation (without actually calling it that) is what kept "patient" in the vernacular.
The UST 10YR is at 1.96% this morning and is down -14 basis points lower than just 24 hours ago with slowing CPI and GDP reports (Thursday and Friday) up next.
On a related note, the USD evidently did not like the dovishness either, but the selloff here is modest compared to bond yields. The USD is only -0.2% vs. Burning Euros and Yens. That should put a short-term bottom in for Oil, Gold, etc. And that also helps keep the S&P 500 at all-time highs (both rate sensitive and inflation expectation stocks stop going down).
For the record, Yellen is as dovish, on the margin, as I thought she could be.
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This is an excerpt from Hedgeye morning research by CEO Keith McCullough. Click here for more information on how you can become a subscriber today.