In equities, commodities, bonds and currencies, 2019 has all been about The Fed and Beijing reversing policy. Both have done 180° turns on their 2018 policies.

At the conclusion of the March FOMC meeting last night, Jerome Powell provided two more dovish surprises (to go with the now infamous Powell Pivot delivered at the January FOMC statement). Firstly, the median dots now indicate zero rate hikes in 2019 (down from two previously). Secondly, the pace of the balance sheet reduction (colloquially referred to as QT) will slow in May and end completely in September. Specifically, the cap on Treasury run-off will shrink from $30 billion a month to $15 billion a month in May and Fed balance sheet reduction will be halted at the end of September. These changes make it quite likely that the Fed is done with tightening for this cycle. In simple terms, the next move in US cash rates is likely down and QT is ending.

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