Early Strength After A Massive Post-FOMC Rally

TYH4 is trading at 112-01, +0-04+ from NY closing levels.

• This comes after the US tsys curve bull-steepened sharply, with yields 13-30bps lower, following the FOMC decision and press conference on Wednesday.
• Fed held the funds rate steady, acknowledging inflation has eased.
• In the press conference, Chair Powell delivered little to no pushback to market expectations of significant rate cuts next year, and in fact, ensured that future easing was the main topic of the day. Whereas in previous press conferences, he has dismissed questions about rate cut speculation out of hand, he entertained several of them today.
• His commentary and tone seemed at odds with his final speech before the FOMC blackout: "It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease."
• The Dot Plot pointed to a 2024 median of 75bp of rate cuts, a sharper pace than indicated in September’s projections, with reductions expected by 17 of 19 members.