With bonds and bullion remainig bid post payrolls, post May Minutes, post April FOMC, and post December's Fed rate-hike, it is clear that the market is losing faith in The Fed... and we suspect The Fed is losing faith in itself as it takes the ax (once again) to its growth and rate forecasts (the dot-plot).

FED SAYS IT EXPECTS LABOR MARKET INDICATORS `WILL STRENGTHEN'

FED: MEDIAN FED FUNDS EST. 1.6% END-2017 VS 1.9% IN MARCH

FED SAYS PACE OF LABOR MARKET IMPROVEMENT HAS SLOWED

SIX FED OFFICIALS EXPECT ONE 2016 RATE HIKE VS ONE IN MARCH

FED: GROWTH IN ECONOMIC ACTIVITY APPEARS TO HAVE PICKED UP

July rate-hike odds are at 18% (and Sept at 19%). Pre-Fed: S&P Futs 2082, 10Y 1.61%, EUR 1.1240, Gold $1285

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Here is the key paragraphs with changes:

Information received since the Federal Open Market Committee met in March April indicates that the pace of improvement in the labor market conditions have improved further even as has slowed while growth in economic activity appears to have slowed. picked up. Although the unemployment rate has declined, job gains have diminished. Growth in household spending has moderated, although households' real income has risen at a solid rate and consumer sentiment remains high. strengthened. Since the beginning of the year, the housing sector has improved further continued to improve and the drag from net exports appears to have lessened, but business fixed investment and net exports have has been soft. A range of recent indicators, including strong job gains, points to additional strengthening of the labor market. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and falling in prices of non-energy imports. Market-based measures of inflation compensation remain low; declined; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Of note: the elimination of the "A range of recent indicators, including strong job gains, points to additional strengthening of the labor market" line, as well as keeping the statement about "most survey-based measures of longer-term inflation expectations are little changed" when clearly they have continued to decline.

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Some context for her actions today... Macro has collapsed...

As has Micro...

The Fed Minutes in May shifted the market's tone...

But since payrolls, everything has changed...

But since The Fed first hiked rates (now 6 months ago!), things have not worked out how Yellen hoped...

Rate-hike odds have been falling across all maturities...

As we suspect The Fed will have to adjust its overly optimstic forecasts down once again...

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Additional headlines:

FED: MEDIAN FED FUNDS EST. 1.6% END-2017 VS 1.9% IN MARCH

FED MEDIAN 2016 GDP GROWTH FORECAST 2% VS 2.2% IN MARCH EST.

FED MEDIAN ESTIMATE CONTINUES TO FORECAST TWO 2016 RATE HIKES

FED: SEP: ONE PARTICIPANT DID NOT SUBMIT L-TRM RATE FORECAST

FOMC DOES NOT MENTION BREXIT,OTHER SPECIFIC GLOBAL RISKS

FOMC: REPEATS,WILL MONITOR INFL,GLOBAL ECON,FIN DEVELOPMENTS

FOMC:MKT INFL MEASURES 'DECLINED,' L-T EXPECT LITTLE CHANGED

FOMC: INFL CONTS TO RUN BELOW 2% GOAL PARTLY ON ENERGY

FOMC: HOUSING SECTOR 'CONTINUED TO IMPROVE'

FOMC: DRAG FROM NET EXPORTS EASED, BIZ INVESTMENT SOFT

FOMC: ECON GROWTH PICKED UP, HOUSEHOLD SPENDING STRENGTHENED

FOMC: LABOR MKT IMPROVEMENT SLOWED, DESPITE UNEMP DROP

FOMC: KEEPS POLICY RATE UNCH AT 0.25-0.5%, VOTE 10-0



Full Redline Below:

Charts: Bloomberg