Updated: 10-01-2014

  • The Federal Open Market Committee tapered the Fed's bond buying program by another $15 bln at Wednesday's meeting, and suggested the program will be wound down to zero at the October meeting so long as the economic recovery remains on track. 
  • However, the Fed will continue to reinvest the interest from its holdings. 
  • Noteworthy was the Committee's inclusion of the 'considerable time' language, suggesting rates are likely to remain low well after the Fed ends its bond buying program. 
Initial reactions to the announcement have been interesting:
  • The 2Y is threatening the 0.600% area as action ticks to levels last seen in May 2011.
  • Post-Statement selling has had the biggest impact on the belly of the curve with the 5Y crossing 1.870% and printing a 38-month high.  
  • The 10Y is contending with resistance in the 2.650% area helped by the 200 dma as trade flirts with levels from the spring. 
  • Outperformance at the long end has kept the 30Y near 3.350% and two-month highs.

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