Fed mintues spark rally

The FOMC meeting minutes came out, and were certainly less hawkish than they have been. This got things going in the stock market, and pushed the indexes to break out again into new high territory. Bonds also rallied, pushing yields on the 10-year down to 4.43%.

The Fed said that it would need to be increasingly sensitive to incoming economic data. Some members cautioned about the risks of going too far with the tightening process (as the Fed usually does).

The problem is that the Fed doesn't really know where "neutral" is. That is why they often overshoot. I suspect that by the time they get to 4.25%, housing will have slowed, inflation will have peaked, and they should start to get a sense that the best course of action would be to pause.