Risk markets are weaker this morning on a smaller than expected decline in continuing jobless claims, as well general concern on rising COVID-19 cases in parts of the country. Long-end Treasuries are well bid again to start the day following the dovish tone from the Fed yesterday. There were not any major surprises from the FOMC, and they made it abundantly clear that the current level of monetary support isn’t going away anytime soon. The official statement pledged to keep Treasury and MBS purchases “at least at the current pace,” effectively flooring bond buying at $80 billion per month and $40 billion per month, respectively. The FOMC also provided its first Summary of Economic Projections since December, and the median participant forecast for the fed funds rate showed no change through 2022. As Fed Chair Powell has made clear in the past, projections that far out aren’t really meaningful, but the Fed is clearly doing its best to anchor forward rate guidance well into the future as the economy heals.
Chief Investment Officer
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