Today's price action has not been so bullishly enjoyable, especially concerning cyclicals, a relative outperformer of late as the market warms up to the prospect of an imminent COVID-19 vaccine breakthrough.
Having said that, the sobering message from Fed Chair Powell yesterday has been a challenge to the view on every step of the way today. And the gloom is bleeding into virtually every asset on the street.
To that point, in the medium term, the momentum and growth trade should continue to lead, with value still facing the headwind of a very benign inflation environment.
In terms of S&P e-mini price action, US markets in Asia are going out near the lows with tech for sale all day, which accelerated a bit into Europe.
However, the market is running into that predictable wall on the money at key technical pivots.
The street has priced out rate hikes to 2025, and when coupled with the fact the Fed has already ruled out the possibility of negative interest rates, it was next to impossible for the FOMC to over-deliver on the dovish side. Now investors are paying the price after the Fed provided no fireworks for the party.
UK Foreign Secretary Raab seems to have got a frosty welcome in Washington DC. Four representatives from the Democratic and Republican parties wrote a letter to UK PM Johnson, urging him to "abandon any legally questionable and unfair efforts" to flout the Northern Ireland protocol.
Joe Biden, the Democratic presidential candidate, took to Twitter to say "we can't allow the Good Friday Agreement that brought peace to Northern Ireland to become a casualty of Brexit" and that any trade deal between the US and UK "must be contingent upon preventing the return of a hard border. Period"
EURUSD
EUR/USD squeeze post-FED after the greenback had a couple of tough days going into the meeting. There was good macro demand ahead of 1.19 and is probably a fair reflection of overall market positioning; CFTC data points you in the same direction. Market positions seem moderately bullish, and hence the risk is perhaps asymmetric to the downside; for now, it briefly breached the 1.1750, but no follow-through yet as some are still holding on to the Pre FOMC long EURUSD lottery ticket bets.