Understand that the Fed’s actions (and other central banks actually) are NOT about supporting stock prices – as they are determined more by prospective future cash flows from business operations than anything else. There is a lot of rubbish in the media on this point.
But bond rates are another matter. Given the hike in bond rates we saw last week – which translates to higher interest bills, and funding issues, the T10 and 3 Month US rates dropped after the announcement. T10 was down 24%
The 3 month dropped 50%.
Question is, will this be enough – we think not. Watch for more action to try to control rates.
Aussie bonds also came down, with the 10 year down 13% and the 2 year down 20%.
