Powell clearly dovish, short end loves it as does stocks but long end doesn't and neither do inflation breakevens

Jay Powell clearly leaned dovish today as even a strong labor market he said would not stop the beginning of rate cuts. And this is why the short end yield fell as it did. However, the long end is not really budging and is exactly the same 4.28%ish level it stood right before the statement. Also of note, inflation breakevens for 5 yr and 10 yr maturities are rising with the former just a few bps from the highest level since January 2023 as if Powell and Co is going to get soft on inflation, the long end and the TIPS market are not going to like it.

With regards to the balance sheet, the message is mixed as where he made it clear they will begin QT tapering ‘fairly soon’, he also said in so many words that ‘going slower could mean going further’ in terms of the ultimate destination and size of their balance sheet.