zerohedge.com / By Richard Breslow / Sep 13, 2016
It seems clear in retrospect that Fed Governor Brainard’s speech yesterday was not aimed at investors. Rather, it was meant quite pointedly at her fellow voting members of the FOMC.
After all, even with Fed speakers having been consistently hammering home a hawkish message since mid-August, the market was still only pricing about a 30% chance of a September move. The odds, by definition, were against an early move. Even as markets began very catchable moves, which have largely defined the last month of trading. Not a time to kick back, despite the time of year
Interestingly, even with a dovish Brainard and September being declared DOA, yields remain marginally higher than when Fed speak began, as is pricing for a December move. And not all that far from the magical 70%. The S&P 500, ultimate leading indicator of continued easy policy, has more work to do to reclaim previous glory
It’s been busy for the big players, as well as the average trader, with any number of serious portfolio managers arguing for pre-emptive portfolio adjustment. Pimco revealed just yesterday that at the end of August it had reduced duration in its biggest fund. And going long break-evens by selling Treasuries for inflation-linked bonds. Gee, now why would someone do that?