F_O_M_C

Right now we are in a kind of no man's land, I don't think the market knows exactly what to make of this all with one interesting asset move, a very weak move in the Euro right at the policy announcement which sent the $USD higher, gold lower (even though Greenspan was quoted just before the F_O_M_C as saying "Buy Gold")...

 The Euro drops right at 2 p.m. on apparent expectations that the ECB will pick up with a QE program to replace the F_E_D's even though the end of QE at this meeting was expected and ECB bond buying would violate their charter which opens a whole can of worms and sets up an inter-eruo country fight which Germany will win, it seems a bit silly.

The weak Euro sent the $USD rocketing higher.

The statement itself had some interesting tidbits, the end of QE was not a surprise although Kocherlakota did dissent, as he'd rather see the current pace of QE extended, much like Bullard's October 15th comments.

The F_E_D did throw the market a bone and left in the "Considerable period" language with regard to rates and how long they keep them low, however there were some slightly contradicting statements such as "Solid job growth gains and lower unemployment"; seeing the underlying broad economy as strong enough to support maximum employment in the context of price stability;; they see the underutilization of labor resources diminishing and feel that the inflation target is on track although in the very near term weakness in oil may keep inflation a bit low, but seen as transitory as far as inflation projections go.

Essentially the message was "Substantial Improvement in the labor market", "Economy expanding at a moderate pace and able to support maximum employment". It looks and sounds like an upgrade of the labor market , substantially, which should cause market participants to wonder just how long ZIRP (Zero Interest Rate Policy) will actually be maintained despite the "Considerable Time" language remaining which has been defined by some F_E_D members as 2 months to 2 years. 

The current view that the first rate hikes won't come until mid 2015 almost sounds like it has been pulled forward by an overall, "Everything is fine and progressing according to plan", except softness in the housing market. I don't see any reason why the market won't take that as "Interest rate hikes sooner than later", but perhaps slower than expected.

As we work through the initial fog of the F_E_D, TICK is bouncing around between +1050 to -1750, lots of intraday breadth volatility which explains why price is kind of choppy, but not real knee jerky at this point.

I would keep an eye on the 30 year yield vs the market as we wait for some other indications to build in on this initial fog. The 30 year yield seems like its leading the SPX intraday as it has on a broader basis.

30 year yields (red) post F_O_M_C seem to be attracting prices toward them.

More coming...