To be fair to Fed Chair Yellen, it was too much to ask of her to concoct some secret combination of words that would magically help stem the tide of recent panic. Still, markets had leveled-off in the sort of sideways approach pattern often seen in advance of 'big news.' But to reiterate, there really wasn't any news. Yellen didn't say anything too surprising. In fact, she didn't have a chance to say much at all, considering these House FSOC testimonies do more to provide a stage to political grandstanding than to an honest discussion about the economy and monetary policy.
The early tenor of the day was dictated by Europe. Considering that European bank stocks were part of the reason for movement earlier in the week, a big bounce in Europe helped stock futures overnight and put nominal pressure on Treasuries. Domestic traders put their foot down when they got in the door and then really went to town after Europe was out for the day. I would normally be more inclined to chalk up some of the afternoon strength to a 10yr auction (considering it happened at the same time that Europe closed), but watching the rally in real time, it was clear that bond markets weren't going crazy right at 1pm. The fact that stocks turned the corner at the same time suggests bigger forces were at work.
Bond markets ended the day at the best levels in more than a year.
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