Spreads continue to tighten across the board, and today's FOMC announcement only accelerated the process. 2-year swap spreads, shown here in red, have improved dramatically since their peak in early October. They are still unusually wide, but at this rate are well on their way to returning to more normal levels. This is a clear sign that the inner workings of the fixed-income market are healing. Confidence is returning, fear is subsiding, and liquidity is improving.
The fixed-income market is telling the equity folks, "hey, come on in, the water's not that cold!" But the equity market is still in a once-burned-twice-shy mode.