Hawkish Fed Falls On Deaf Ears

In what was perceived as a hawkish pause by the FOMC, fell on deaf ears shortly after the statement by the Federal Reserve was released Wednesday afternoon. Initially, after investors recognized the hawkish projections, interest rates quickly raced higher and stocks sold-off quite substantially. But that sentiment didn't last long, as US 10-year futures immediately recovered, spending the rest of the session grinding higher. As a result, key trendline support that originates off the March lows remains intact and if held in the immediate future could hint of a period of stability for interest rate futures. In terms of yields, the correlating trendline is even more apparent. The falling trendline (10-year yields) extends further back, connecting the highs from last October. Both trendlines will be keenly watched the rest of the week ahead of two key central bank meetings, namely the ECB and the BOJ. Stocks, meanwhile responded off post-statement release lows, allowing the NQ futures new front-month September (U) contract to reach fresh contract highs.