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Market Roundup, The End Of Accommodation

US
Carry-over weakness in the short end this morning after markets reacted bearishly to the FOMC holding rates steady Wednesday:
  • Short end yields surged on heavy volumes (2YY 1.1424%; 5YY 1.6713%) while equities gave up strong gains to trade weaker as Chairman Powell conceded liftoff will "soon be appropriate" as economic activity continues to expand at a robust pace and ""inflation remains well above our longer run goal of 2%."
  • Broad flattening for yield curves this morning: 5s30s -4.0 at 43.8 (March 2020 lows) as short end remains under heavy pressure:
  • Lead quarterly EDH2 remains under pressure (-0.045 at 99.49) after latest 3M LIBOR set' surged +0.02143 to 0.29900% (+0.04129/wk) -- Highest level since May 2020. Done and dusted: 25bp hike fully priced into March while June more than halfway to pricing in 50bp as a result of Wed's hawkish hold from the FOMC.
  • Stocks initially held gains until balance sheet run-off was discussed, lacking details over "sooner, faster" asset reductions appeared to trigger a sell-off.
  • Equities have recovered some ground this morning, SPX eminis off lows and see-sawing around steady as focus turns from policy back to latest earnings cycle.
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