Source: Bloomberg

Treasury yields plummeted after the Fed’s dovish statement today. “Today’s decision does not represent a reassessment of the economic outlook,” said Fed Chair Janet Yellen at her press conference on Wednesday.  Snooze.

One has to pour a bucket of ice cubes over one’s head while listening to Dr. Yellen claim that the Federal Reserve is trying to set the federal funds rate at the level which will allow for noninflationary growth. Just who cares about the federal funds rate? Bank lending growth has fallen to nearly zero (commercial paper isn’t taking up the slack). All Yellen did was to reduce the incentive to hold short-term dollar deposits as opposed to short-term deposits in other currencies.