Bond traders suddenly fear the Fed. With all the green shoots sprouting around the globe, many fixed income types expected the Fed to steer clear of adding to its gargantuan commitment to buy Agency and Treasury debt. Looks like the Fed is holding a few (hundred) billion in reserve should the economy continue to weaken. This news, which came via the minutes of the April FOMC meeting suggests the Fed will support the economy at all costs. This is undercut yields on Treasuries and weakened the dollar across the board.
USD/JPY might be most adversely affected owing to continued flows into US bonds by Japanese investors.
USD/JPY support lies down at 94.50.
