First, let’s get the gloating out of the way. I said that the Fed would not hike rates here and here. Nobody likes a chest pounder, so that’s the end of the discussion.
So now, what is the trade? Not only did the Fed not hike rates, but the directive was so dovish, it was far outside the range that any reasonable person thought was possible. Should be bullish, right?
Bullish on two-year notes.
For years, Jefferies Chief Market Strategist David Zervos recommended positions in “Spooz and twos” when faced with a Fed that had no interest in tightening monetary policy as the economy was recovering briskly. Now the Fed is on hold indefinitely.
Buy stocks? Maybe. Maybe just not in the US.
