Dollar Loses From Hit to Fed Credibility: 3-Minutes MLIV

Mark Cudmore slams the Fed press conference as a credibility disaster, arguing it will weigh on the dollar and long-term bonds while steepening the yield curve. He also sees a near-term rise in cross-asset volatility as markets adjust to heavier data dependence. - Fed press conference described as a disaster that damaged central bank credibility - Dollar expected to weaken further until Fed credibility is restored - Long-dated bonds seen as underperforming, leading to a steeper US yield curve - Shift away from forward guidance toward data dependence likely to increase near-term cross-asset volatility - Credibility restoration, not a rate hike, is needed to stabilize market expectations - Communication missteps included undermining the inflation target and measurement methods