Treasuries rallied after a Dovish Fed statement suggested that the pace of rate hikes will be slow. The Fed improved its stance on the economy, but stated that the conditions for a rate hike have not been achieved. General consensus is two hikes before the end of the year, so that leaves September and December. During the press conference Yellen urged that the market concern itself more with the pace of the hikes than the timing of the first hike. Yellen said, "Economic conditions are currently anticipated to evolve in a manner that will warrant only gradual increases in the target federal funds rate." The statement reiterated that inflation must be expected to move back to the 2% target over the medium term before they raise rates. Inflation has been tracking near 1.2% over the last year. Yellen also cited signs of "cyclical weakness" in the labor market, and noted that wage growth remains "subdued". Stocks rose after the announcements, with the S&P 500 up 0.2 percent to 2,100.44. Ten-year Treasury note yields were little changed at 2.31%.

This morning we had initial claims and continuing claims, CPI, and Current Account Balance. Claims were both down with initial claims falling to 267k from 279k prior, and continuing dropping to 2222k from 2272k prior. Consumer prices rose 0.4%, with the core rate rising 0.1%, which was lower than expected. The current account deficit widened, but by less than economists had anticipated, which is GDP positive.