As expected, the FOMC left rates steady following its July meeting, noting that the labor market had strengthened since June and that economic activity had been expanding at a moderate rate.

Ryan Craft noted that the media is talking as if the Fed was quite hawkish, but the markets didn’t behave that way.  He noted that yields were falling sharply, stocks were largely unchanged after the news and that fed fund futures (which suggest a 45 percent chance of a hike in December) are basically unchanged from the day before.

He concluded that it looks like the markets think that the Fed is bluffing, which seems to me like deja vu all over again.