When the Fed minutes were announced yesterday, risk assets took them as doveish on inflation and suggestive of QE. My QE trade rallied, except for treasuries, which dropped because of a suggestion in the minutes that the Fed might focus on nominal GDP growth rather than inflation in deciding whether to go on with QE — which is mildly positive for future inflation.

I am torn about whether to close the trade or not. With the trend in place and less than 1ATR of profit, the bias must be towards keeping it, and the hope that further QE will create the conditions for higher inflation has been part of the story from the start and has not stopped Treasuries from rallying. I do feel cautious, however — the market could now focus on this aspect of the story.

Here is a chart:

Update: This story says that the Fed is considering targeting higher inflation. With this trade at around half a risk unit of profit the market is too close to my stop for me to be sanguine. Expectations of extraordinary Fed action can no longer be expected to raise Treasury prices — they may raise or lower them, depending on how this story plays. I have therefore taken profit on this trade.
Update2: More here.