While stocks, and with a notable delay bonds, were happy to run with Powell’s dovish reversal on Wednesday, one key market – arguably the most important one for financial conditions when it comes to the broader economy – has refused to respond.
Earlier today, instead of reacting to what has been interpreted as the Fed Chair’s “dovish repricing” of future rate hike expectations, 3 month USD Libor jumped over 3 basis points to 2.73813%, the highest level in more than ten years.
