Dot-dot-dot, dash-dash-dash, dot-dot-dot

Well, that was....intense.

The Fed dropped the word "patient" and explicitly left the door ajar for a move in June should circumstances warrant.   However, the real sting in the tail was in the SEP, where the infamous dot-plot ratcheted lower in response to downgrades to the growth and inflation forecasts.

The end-2015 median is now at its lowest level since before the Taper Tantrum.

Market reaction was swift, and Yellen's press conference did little to dissuade the participants from buying securities and selling the dollar.  For today at least, score this one in favour of the monetary heroin addicts.

Probably unsurprisingly, the most vicious price action took place in the most-positioned market, EUR/USD.  Pre-Fed short covering evolved into post-Fed stop-lossing, which itself became a full-blown rout in the gray zone after 4 pm NY time.  Not since Bernanke pulled a volte-face in July 2013 have dollar longs been punished so swiftly, with so little liquidity.

From Macro Man's perch, price action in eurodollars was disappointing but not altogether surprising given the magnitude of the dot-plot downgrades.   They key question here is whether the market chooses to maintain a 10-20 bp "easing risk premium" in the ED market versus the dot-plot, or whether it's now happy to let the market price converge now that the Fed has apparently capitulated.

Macro Man has to confess that the dot-plot forecasts moved a bit lower than he had envisaged; such is life when ruled by a central bank that forecasts with a rearview mirror.  It's just as well that he had a last-minute bout of jitters and sold a few dollars and cut a little bit of rates risk before the announcement.

From his perch, he still expects a handsome snap-back in the data for April and March; while he doesn't think that will generate a hike in June, it could well be enough to swing the dot-plot pendulum the other way for 2016 and beyond.  Although he is tempted to add to some of his ED bets given this sharp rally, prudence suggests that it's better to be a day late than a day early, particularly if the market decides that it wants to price perma-ZIRP to feed the jones of all the asset-market junkies.

As for the euro, meanwhile, let's not forget that even at the peak of the gray zone squeeze, it was still down some 1.5% from February's close.   Scant consolation if you were the poor bugger selling in the low 1.04's last week, but less of a worry for more strategically-inclined investors such as your author.

Thus, from Macro Man's perspective, the SOS that you heard after Wednesday's trading was not a plea of "save our shorts" from underwater euro bears, but rather a weary, resigned "same old sh--" that we've had from the Fed (and BOE) over the last couple of years.

(As an aside, did anyone else find irony in Yellen's response to the chap from American Banker magazine?   Y'know, the bit about getting rid of incentives for excessive risk-taking....)