A Dovish Fed Day In Charts

So “dovish” it was, or at least “dovish” was the market’s read on the Fed statement.

The language on the outlook for inflation was timid and “relatively soon” on the balance sheet gives them an out if they end up needing it.

“The post-meeting statement noted that the Committee expects to begin balance sheet normalization ‘relatively soon,’ likely implying an announcement at its next meeting on September 19-20,” Goldman wrote after the release.

“The FOMC set the stage for a September announcement of an October start for tapering its $4.5t balance sheet,” Stone & McCarthy Research Associates’ Terry Sheehan said, adding that the “a balance sheet policy change could be delayed if it looks like an increase in the debt limit is not immediately forthcoming and with it the risks of U.S. default on its sovereign debt.”

The Dow put up a nice gain thanks almost solely to Boeing. Everything else, mehhh.. not so much:

Stocks

Yields fell, reversing course after rising on Tuesday:

10Y

The VIX did this just as the Fed decision crossed:

VIX

The dollar plunged as the Fed came across as cautious on the outlook for inflation.

DXY

Oil hit an 8-week high, buoyed by EIA data which largely confirmed yesterday’s bullish API numbers, jitters about Venezuela, and promises of a cap on Saudi exports.

“The primary driver behind the rally is that you’ve got more inventory draws,” Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, which oversees $142 billion of assets, said on Wednesday afternoon. “The market has essentially been hoping and hoping for inventory draws, so that’s a good thing.”

Here’s what “a good thing” looks like:

WTI

The euro surged to a 2 1/2-year high following the Fed statement, finally breaking through the August 2015 1.1714 peak:

EUR

EUR2

European shares were mostly higher on the day ahead of the Fed…

Sx5e

… and that’s good to see considering the rather tumultuous session the DAX had last Friday, but with the euro surging, don’t forget the following chart which pretty clearly suggests European equities are getting a bit sick of the inexorable rise in the currency:

EurEurostoxx

The Aussie headed sharply lower overnight after a Q2 CPI miss and a dovish Lowe, but between the bullish commodities backdrop and the Fed, it couldn’t help but rally, hitting a fresh 2-year high at .80:

AUDUSD

The kiwi hit a two-year high as well, for anyone who cares about that.

Copper is (also) at a two-year high, rallying on news of a proposed scrap metal ban in China:

Copper

Gold stormed higher after the Fed.

Gold

Anything EM was of course happy with a dovish Fed as the more timid Yellen is, the longer the carry party can continue:

EEM

EMB

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