If the decision to leave rates unchanged in September was essentially a consensus, more surprising at the last FOMC meeting were Yellen's rather dovish words: the market expected either hawkish action (early hike) and then a speech very soft to throw water on the fire, or on the contrary a dovish (hold) action but a much more determined speech towards a clear indication of an increase within the year.
Although obviously the rate hike between now and December is far from excluded, the Fed's indications have been rather vague, effectively including input from the global context into the decision-making process; wanting to force the interpretation a bit, one could say that the Fed, looking closely at its reference market, would already be in a position to start the normalization process while the decision to stall depends more on "exogenous" factors (see China) .
If the rally in rates is easily understandable with the US 2.15-year bond returning to 0.67% following the Fed's announcement and the 0.80-year bond at XNUMX% after a hike in the XNUMX% area, the first bearish reaction of the stock market.
One aspect is certainly the renewed uncertainty (as of today the implied probabilities for October are in the 18% area and for December just 46%). It certainly does not play in favor of risk appetite: on the other front, a Fed in dovish hold is a of the fragility and difficulty of the moment, a message automatically translated by the stock lists in today's violent downward movement.
In the middle between bonds and equity is the whole world of credit which, while suffering from the reflection of the volatility of the share, benefits from the prospect of a world where rates seem destined to remain lower for longer; corporate bonds should emerge positively with particular attention which, however, must be paid to the lower part of the credit range where the most leveraged companies risk suffering in a world "doomed" to increasingly asphyxiated growth.
