If changing perceptions about values is the main goal of the Fed, it seems to be succeeding. Stocks and treasuries have certainly switched positions on the comfort scale recently with equities now being repeatedly called an "all in " and owning treasuries now being claimed by managers to be the worst investment possible. The bull cheer in stocks comes after a two and a half year bull run along and with a Fed as recently as last month declaring yields would remain at historic lows for several more years.
If the Fed has helped to alter value perceptions then it comes from a lot of work as the great liquidator. Not to be confused with liquifier, rather a proxy liquidator. Banks unable to retrieve debts owned them, Fed in effect liquidates the trade by providing zero cost money to the lender and lets them hold the diminished asset as if to say, go ahead and get whatever you can for it. The same thing is going on by European central banks although not nearly as effectively. Just in case the CDS claims are made, flood the system with cash, though probably no where near the money needed if necessary.
There is a natural bias at work here of coarse. The world is long stock despite what "cash on the sidelines" rant one might believe. The perception of a recovering economy then leads to a bias toward higher rates or bearish bond recommendations.
The Fed has consistently seen a much darker side to the economy. A potential storm's impending arrival seemingly as hard to peg as typical forecasts as to weather to call it a storm watch or a storm warning. Regardless, the Feds actions to prepare for any bad weather has had the effect of herding returns into assets outside the comfort zone of virtually zero risk treasuries. Now these dollars are corralled into a smaller and smaller fenced area as prices for assets such as stock are significantly higher.
If the Feds accommodation is an accurate perception into storm forecasting, then bullish sentiment of stocks and bearish sentiment on bonds probably mark a top for each.
