Treasury and Fed: A Falling Out?

The issue isn’t whether the Treasury is ending $454 billion in special lending programs on schedule on Dec 31. It’s that there was obviously a breakdown in communications and, apparently, a disagreement between the Treasury and the Fed. In other words, Mom and Dad are fighting.

The dollar’s reaction has been muted so far, as the Fed still has plenty of firepower (as they keep reminding us.) But, of course, today is OPEX. The futures’ initial 39-pt nosedive was promptly “fixed” by a timely beatdown in VIX – that pesky .886 Fib at 22.66 again. ES is back above its SMA10, so all is well. Next week, though, with low-volume holiday equity trading, should be another story.