Okay, the Fed won’t turnoff the spigot on QE completely as it is still buying mortgage bonds through the end of 2009 but it has put a date-certain on the end of its Treasury buying program at the end of October. Traders assume this will lead to a steeper yield curve as the short-end holds near zero and long-end yields edge higher.

The reaction to the news has been more severe in the forex market than in the bond market (go figure) as the dollar recoups most of its lost ground. Risk is coming off across the board.

While the Fed has not taken the punch bowl away, they have taken away one of those little glass cups, the first in what dollar bulls hope will be a series of moves to put monetary policy on a more normal path as the economy recovers.

EUR/USD has dipped about 90 pips so far into the 1.4140s, S&P has fallen 6 points in the wake of the news while bonds, strangely enough, are little changed at 3.72% yield in 10s.