The dollar is up and stocks are down, following a Jon Hilsenrath piece suggesting that the Fed won’t pursue an uber-aggressive QE.But stocks aren’t off that much, really. The real carnage is in the bond market, where selling in the 10-year and 30-year is aggressive,
If we ended here or with a 0.5% decline, that’s really a pittance given the recent runup. That’s hardly anything to hyperventilate about, and it suggests that the idea that stocks are based on expectations of mega-QE are misplaced.
Anyway, it’s a long day still, and we have durable goods and new home sales coming up, so anything can happen.
But it appears more and more that the bond rally, not the stock rally, was the beneficiary of the QE talk, as we suggested last week.