January 30, 2019 Bonds Up, Stocks up Bigger After Fed Meets

The FOMC has vowed to exercise patience when contemplating any rate changes while simultaneously pledging flexibility in how it goes about managing its balance sheet, e.g. quantitative tightening. Patience and flexibility are desirable traits and financial markets have embraced them with enthusiasm. The Dow closed up 435 points and the Ten-Year's yield is down to 2.68%. The Fed has become so flexible that it dropped from its previous statement the language calling for "some further gradual increases." When investors in equities and investors in debt perceive the same news as being positive, one can easily assume that nobody wants higher interest rates.