Fed Threads Needle With Unfriendly Dots Balanced by Peaceful Powell

As expected, the market's initial focus fell squarely on the Fed's updated dot plot at 2pm ET today (Fed members' rate forecasts).  The fact that the policy statement was effectively a carbon copy of the last one made that an easy call.  The dots moved up perhaps slightly more aggressively than many expected. Bonds sold off a bit as a result.  But Powell struck an equanimous tone in the press conference, simultaneously explaining why rates were going a bit higher, but that the Fed was receptive to bringing them back down under the right conditions.  Bonds managed to bounce back to end in moderately stronger territory.  Best of all, the entire affair was contained in Tuesday's trading range, thus suggesting the market responded fairly logically to CPI and to the Fed's needle threading efforts, incidental or otherwise.