As I write this, the Nikkei was down 10.5% on the back of worsening news about its nuclear plants. The STOXX has cratered 3.5% and most global bourses are down 2-3%. Dow futures are off over 200 points. Meanwhile, the bond market is on a tear.
Today also happens to be the day of an FOMC meeting. Going into the meeting, there had been some speculation that the Fed may come out with a more hawkish statement in order to bolster its own inflation fighting credentials.
...but then there is a problem of that "explosion" in Japan. Assuming that the tendency is for the Fed to become more vigilant on the inflation front, how would the FOMC statement reflect those concerns in light of the market turmoil? Aren't central bankers genetically programmed to be financial fire fighters?
This is a real-time test of the Bernake Put. All eyes should be on the FOMC statement at 2:15 EST.
Addendum: The BoJ has already take steps to inject liquidity into the system. Is the FOMC watching headlines like Bank of Japan Fails to Contain Investor Panic as Nuclear Danger Escalates? Stay tuned.