Fed Comments Should Bolster Bond Market

The Federal Reserve's comments Tuesday substantiate the rebirth or extant momentum in a variety of markets. Topping the list is the run to new contract highs -- and revival of upside momentum -- in June T-bond futures (USM3:CBOT).

In its policy statement issued after meeting this week, the Federal Open Market Committee, said "the probability of an unwelcome substantial fall in inflation exceeds that of a pickup in inflation."

Call it an unwelcome fall in inflation, disinflation or deflation, the comments provide the fuel that should continue to propel the middle and long end of the debt curve, a current that could be discerned in the charts at least a week ago, when T-bonds rallied on bearish news. The Fed's words also support the continuation of the downtrend in dollar index futures (DXM3:NYBOT). ...