Stocks fell and rates sold off as monetary policy in the US and Europe was in focus. The S&P 500 fell 0.5% to 2,150 and the Dow Jones lost 0.5% to 18,168. Bank shares outperformed the market rising 1.1% while utilities fell 2.1%. Rates rose today as the two year Treasury yield rose 4bp to 0.83% and the ten year Treasury rose 7bp to 1.68%. Accordingly 2yr vs 10yr bear steepened to 0.86%. Today trading indicated the expectation that the Fed would raise interest rates by the end of this calendar year. Similarly across the atlantic reports stated that the ECB would gradually taper bond purchases even before it had previously indicated as the end date. The US dollar gained against all peers and was just modestly higher against EUR. USD rose 0.1% against EUR to $1.1204. USD rose 1.2% against JPY to Y102.87. USD rose 0.8% against GBP to $1.2732. In commodity markets oil prices drifted back somewhat but Brent remains above $50. WTI lost 0.4% to $48.61 and Brent fell 0.2% to $50.81. On the aftermath of the ECB report the 10 year German bund yield rose 4bp to -0.05%. The sharp move today in rates can be attributed to monetary policy expectations. The market for Fed funds futures rose to reflect a 61% chance that the Fed would raise rates by year’s end compared with just 51% last week.