Thought Of The Week When the Lights Come on At the End of the Night
The FOMC minutes released on Wednesday caused many investors to take flight as it was more hawkish than expected. The actual monetary policy meeting happened in mid-December, but minutes were released at 2pm (EST) three weeks after the day of the policy decision. Firstly, the Fed doubled the pace of taper, allowing it to end asset purchases earlier, March rather than June. Secondly, the dot plot in the December FOMC meeting featured three median hikes (from just a half a hike in the September FOMC projections), signalling a shift in the Fed’s views on risks around inflation. Lastly, the FOMC revised its statement to drop its previous intention to maintain an accommodative policy stance to keep inflation above 2 percent for some time. 10-year Treasury yields rose to as high as 1.71%, a level last...