Bonds Speak Loudly

While the stock market had a quick drop on the FOMC announcement and Yellen press conference, the belly of the curve in Treasuries got sucker punched hard by Janet "Tyson" Yellen.  It is a bruise that won't go away in a day.  It is a mini-version of June 2013 when you had both stocks, and especially bonds get hammered on the Fed announcement.  

Perhaps it was unintentional, but Yellen sounded optimistic about the economy and therefore her 6 mo. after QE ends rate hike statement was taken to be a hawkish one.  Even if in the long term, the market has it wrong, fast money moves the market, and it wants out of bonds.  The economy is slowing, and there are contagion risks from China, but Yellen still has a rosy view of the future and the market is in the process of reflecting that view.  

I am expecting bonds to selloff to perhaps 2.95% on the 10 year yield, over the next couple of weeks.  However, longer term I am bullish on bonds.

S&P is untradeable here, right in the middle of the range, and its teflon status remains.