Dallas Fed President Fisher employs the “Powell doctrine” of using overwhelming force when unleashing US military power to describe the Fed’s actions to date. He also says the Fed has ammunition in reserve, the ability to buy long-term Treasuries to put liquidity into the system and lower the term rate structure.
The bond market is more focused on firm stocks and is giving back price gains in a hurry. Yields have risen back above 3% in the 10 year maturity to 3.03%.
The reflation trade is alive and well this morning, at least in the short-term. Look for Stop loss buying in EUR/USD above 1.2600 this morning. We’d be bery reluctant to fade the EUR rally at these levels.
