The S&P's downgrade of the US credit outlook didn't have much of an effect on markets today. Stocks ended down a bit lower than they were before the news hit (they were already lower in the pre-market). Bonds actually ended higher on the day.

Far more important was this news from the FT (via PragCap) that the Fed is about to confirm the end of QE.

Specifically, it's expected to signal at its April 27 meeting that there will be no more asset purchases at the end of June.

With inflation clearly on the march (though not in the categories where the Fed would like to see it: wages and home prices), and the economy having stabilized, easing is basically off the table. Even if conditions warranted more of it, the politics right now is so anti-Fed that Bernanke really has no choice but to take the training wheels off.

Thus we got the market swooning, the dollar rallying, commodities falling, the bonds rallying -- all exactly what you'd expect at the end of QE.