CHART OF THE DAY: The Fed Is In a Box

Since the Fed’s hawkish/dovish playbook (which Powell is sticking to) doesn’t allow him to “go dovish” in the aforementioned US domestic scenario (and his boss wants some serious cheer-leading on the economy into the mid-terms), I think the Fed’s in a box. 

And, again, so does Mr. Market. Just look at the US Yield Curve Compression this morning: 

1. UST 2yr Yield is sticking at 2.56%
2. UST 10yr Yield is correcting to 2.94%
3. Yield Spread (10yr minus 2yr) is compressing to a new YTD low of +38 basis points (see Chart of The Day)