Fed preview: The risks are all one-way

Author: Jamie Coleman | Category: Central Banks

Like last Friday’s employment report, the risks headed into tomorrow’s FOMC decision and quarterly press conference are all one-way. The market is set-up for disappointment unless the Fed replaces Operation Twist with outright purchases of Treasuries on a dollar-for-dollar basis, maintaining $85 bln of asset purchases and the longer end of the yield curve.

If the Bernank disappoints Mr. Market, look for a dollar rally and for a slide in equities and commodity currencies.