Gold Screams Afters Yellen Fails to Move the Needle

Traders were looking for a hawkish Yellen and a hawkish Yellen is what they got.

At her highly-awaited Jackson Hole speech, FOMC Chair Janet Yellen said that the case for rate hikes “has strengthened in recent months,” echoing recent hawkish comments from other Fed officials.

Initially, the market moved as we expected — the US dollar spiked, and gold and US Treasuries collapsed.

However, the moves were very quickly retraced.

Here's the dollar index:

Here is gold (GLD):

The junior gold miners (GDXJ):

TLT:

Crude oil is also on FIRE:

So we are getting the ‘sell the news' scenario I presented in today's Morning Hammer column. (not that I bet on it…)

Since Yellen delivered exactly what the market expected, the hawk trades (gold down, Treasuries down) aren't getting any additional follow-through.

In fact, rate hike expectations have actually FALLEN since the speech.

Earlier today, Fed Funds futures were pricing in a 57% chance of a December rate hike.

That number is down to 55% so Yellen did not move the needle.

Biotech (IBB) also ripped off morning lows and is up 1.5%.

The VIX is down 8.4%.

Meanwhile, SPX fell about 5 points before extending higher above 2187.

We've gone 34 days without a 1% move in the SPX.

That streak may indeed break today.

Next step: let's see if these counter-reactions hold. Fed says often see multiple dramatic moves before the closing bell hits.