Was it only a week ago that Macro Man was writing about the "shock and awe" of the Fed's dramatic embarkation into the world of QE and credit easing? The world seemed alive with possibilities, with the triple barrels of the Fed, the BOE, and the SNB aimed at stemming the impact of collapsing global monetary velocity.

A week on, and "shock and awe" is looking more like "shock and awful." Ten year note futures are nearly a full point below the first price printed after the FOMC announcement, and a point and a half below the closing level on the day. If you bought and held bonds on the Fed's announcement, you have lost money. Put another way, the only way to make money out of the Fed's QE was to be on the distribution list-and make no mistake, it exists in the banana republic market that the US has become-and get the tip-off in advance. As an additional kick in the teeth, the Fed, after having initially announced that the vast majority of UST purchases would be in the 2-10 year sector, announced last night that it would buy back some long bonds as well. While the two statements weren't technically contradictory, in hindsight the first one now appears to have been misleading. The 10-30 steepener has now gone wrong as well. Awful indeed.
Meanwhile, in the UK, the impact of QE was dulled yesterday by a higher-than-expected inflation print (the joys of a weak currency!) and comments from Merv the Swerve. Less than three weeks into QE, and Merv was already talking about the possible need to hike rates aggressively at some point. He also suggested that the BOE might not deploy its fully alloted £150 billion of buybacks should the program prove effextive. While there was nothing technically wrong with these comments, they were the wrong thing to say to a teetering Gilt market, and were received with all the pleasure of a swift kick to the groin from an iron-tipped boot.