Powell Steers A Steady Ship

T-Notes operate around late NY levels after the re-open, last -0-06+ at 131-28+, after pulling back from Fed-inspired best levels in late NY trade. The cash curve finished off of steeps, twist steepening on the day, with 5s representing the firmest point on the curve.

• The Fed ultimately left its broader monetary policy settings unchanged, matching expectations, while the median dot for the end of '23 didn't project a rate hike (which read as dovish vs. many expectations). Elsewhere, Fed Chair Powell pointed to details on matters surrounding Tsys & the SLR exemption in the coming days, while the Fed raised the counterparty cap of the o/n RRP facility today from $30 to $80bn.
• In the wake of the press conference we noted that Powell's comments can be summed up by the words: "don't worry." Yes there is still great uncertainty about the outlook. But don't worry about the dot plot and the individuals looking for hikes in 2022/23 (he said "I wouldn't read too much" into the SEP they just released), don't worry about the US becoming Japan, don't worry about supply-side bottlenecks, don't worry about pent-up demand-led inflation, don't worry about financial conditions, don't worry about short-term inflation overshoots, don't worry about long-term inflation overshoots, don't worry about the Phillips Curve. He even noted that he wasn't worried about the Eurozone's economic performance, because the US is "in a good place." Maybe worry about long-term economic scarring, and/or divergent labor market outcomes/overall labor market slack. But he was testy (again) when asked questions about possible asset purchase shifts/operation Twist etc. Genuinely seems like the FOMC didn't discuss much in the way of changing the course of monetary policy at this meeting.
• The Australian labour market report headlines the regional docket during Asia-Pac hours.