Effect of minutes of the Fed would not remain for a long time: still good time to buy US Treasuries.

Short comment

Impact from the minutes which were disclosed at yesterday is attacking US asset markets now. Bullish stance, totally reversed from what market participants had expected, is dragging Equities and Treasuries in the US.

However, I do not think the impact would remain for a long time. Even if the Fed could raise their policy rate, the number of the rise can't be larger than three or four, expected during whole last year. In fact, the members are repeating same point continuously: the institution can adjust the policy according to situation. Besides, some members didn't scare to stipulate the end of contraction of the balance sheet. Next sluggish indice will change their sentences. The participants are overreacting to a few sentences which could have come up anytime.

I still believe the stock market will be in bullish momentum or, at least, not be in bearish momentum for a while, but with huge volatility. In fact, the volatility could become stronger than before with the messages in the minutes. Therefore, buying long-term maturity US Treasuries is still valid strategy.

There is another reason why we should keep focusing on US Treasuries: the participants welcome European government bonds. They are buying 10-30year European - from Italy to France - government bonds with all money they have. I think US treasuries deserve to get benefits from the trend too, specially with much more volatile regional stock market than the European market.

Even though the messages were bullish, more than expected, the degree was much weaker than it could be. The participants will realize it soon.