Keeping on the unwind theme, here's SocGen's thoughts after the FOMC minutes
SocGen's head FX strategist, Kit Juckes reviews the FOMC minutes.
"Firstly, what matters for the dollar now that the rate-hiking cycle is underway is not how many hikes we get this year (or next) but where the Fed's going in the longer run. And secondly, it's important for the path of longer-dated Treasury yields. The dollar gets no help from the Fed if we're collectively tempted to revise terminal Funds down rather than up. And, with 10s still flirting with the bottom of their 4-month range, the danger of a break lower's clear in USD."
"The wider Fed debate is about the impact on risk assets of shrinking the balance sheet. If near-zero rates and central bank buying of bonds have been the fundamental driver of global capital towards higher-yielding assets, then reversing both parts of this can't be helpful. Which is how markets have reacted overnight. "
US stocks have banished any thoughts about Fed worries over stock prices as they've turned green. The S&P is +6 at 2359, the Dow is +50 at 20698.
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