• QE2 to end in June, as scheduled; bar for QE3 raised; “trade offs” less favorable as inflation has risen; “extended period” means at least to FOMC meetings
  • US durable goods orders rise 2.5% in March
  • Spain, Portugal say they support Draghi to head ECB
  • Greek bond yields set fresh record; 2-year note ends at 25.4%; 10-year 16.18%
  • Commodities add to gains after no Fed surprise; Gold closes at record $1528; oil rises $1 to $113.20
  • S&P 500 closes up 0.6% at 1356, highest since June 2008
  • US 10 year note yield rises 5 bp to 3.36%

Beyond signaling an end to QE2 in June as expected, the Fed’s Bernanke did little that surprised the market. Rates look likely to stay low for months ahead as Bernanke clarified what the FOMC means by “extended period”. That is at least two meetings, the chairman said.

EUR/USD surged after some initial fluctuation after the statement was released (we dipped to 1.4630 for a second) , stalling just short of a 1.4800 barrier late in the day.

AUD/USD reached 1.0879 as traders scooped up commodities after getting the okay from the Bernanke. Inflation in the US is transitory, he says.

USD/JPY was very volatile today. It rallied to 82.74 at the 15:00 GMT fixing on a buy order reputed to be as large as $4 bln. We popped to 82.77 in the immediate wake of the FOMC statement but then dove back to 82.02 late in the afternoon in the dollar down draft.

The market continues to whistle past the Greek graveyard despite all signs that a debt restructuring, which central bankers agree would be disastrous, is inevitable.