It was shaping up to be a pretty good day for stocks until the Fed minutes dropped the balance sheet hammer on the markets this afternoon. In the minutes detailing the discussion at the March meeting, Fed officials suggested they might begin draining the balance sheet later this year. Far from being taken as a confirmatory signal that the economy is set to accelerate – and take with it real growth expectations – markets seemed to anticipate that the additional tightening measure could cap any upside momentum that may have originated in strong survey data so far this year.
