The Timiraos article earlier might have been a leak, or maybe not. The Fed clearly leaks to him but the text of the article wasn’t as aggressive as the article.

But Daly removed any doubt. She arrived on the wires with unscheduled comments and a clear dovish message. Tomorrow is the Fed blackout and this is clearly a coordinated message to push back against the market pricing in too much tightening.

That’s filtering through the market more dramatically now with the dollar sinking, yields falling and the S&P 500 up 1.5%. The termina Fed funds top is back to 4.85% from 5.03% yesterday. Daly spelled it out saying 4.50-5.00% should be seen as the top and that the SEP is still valid.

Previously, Daly had been toeing the hawkish line but she’s sounding much more dovish now. She has carried water for Powell in the past and I have little doubt that she’s doing the same thing again today.

Why do this?

Powell was worried that letting markets price in 75 bps again in December and a higher terminal top would result in him having to push back against that later, setting up an even-bigger shift. In addition, the Fed might have been getting uneasy about a 30 bps move in 10s in three days along with a soaring US dollar. There’s no doubt that foreign officials were also undoubtedly calling the Fed worried about currency depreciation.

In short, this is not a message to ignore. At the same time, I don’t think there’s too much more left in the move. Bonds have already reversed. Stocks could run further and the dollar-long trade is crowded but the alternatives aren’t exactly appetizing.