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US Rates Surge Following Hawkish FOMC Hike

US Rates Surge Following Hawkish FOMC Hike

US Treasury yields are surging in a second time after market participants have digested the yesterday's FOMC meeting. The meeting turned out to be a story of two different stories: one related to the release of the statement and the other related to the press event. Following the announcement of the policy announcement, US yields increased dramatically as traders took a liking to the following statements:

In determining the rate of any future increases in the target range The Committee will be taking into consideration the overall tightening of monetary policy and the time lags at the impact of monetary policy on inflation and economic activity as well as financial and economic changes.

Initially, it was seen as an indication of a possible reduction in the number of members in December, which that the markets have been begging for since a while. Following the announcement, the 5-year note jumped 10 basis points and the 5s30s sank significantly. In the meantime, the US Dollar headed south with yields while risk assets increased when traders believed that the pivot could arrive,said by online casino real money.

It was the press conference then Fed Chairman Jerome Powell immediately talked down the low-risk bets. Today's session was the only one that saw the US Dollar Index punched back to 113, while the two-year Treasury yield reached its highest since 2007. The market's mood changed in the wake of Powell's comments. Powell said that "the final rate of interest are likely to be much higher than was anticipated." Powell also stated that the final level of interest rates will be higher than previously anticipated. Powell added that it's "premature to consider a stoppage of rates hikes."


In November, the FOMC meeting could alter the course of future rate increases more difficult to predict, since the Fed has already indicated that they are reviewing its "cumulative" characteristics of tightening. The addition of that phrase to the policy statement could provide the FOMC the ability to decide on future meetings that place a greater focus on data that is coming in. In the coming week the markets for rates will be required to process NFP and nonfarm pay ( NFP) data , as along with a new CPI print. These data points could help in showing whether the market attempts to prove the Fed's hand with the pivot.

However, the new cycle of SEPs (summary of economic projections) we'll get during the December FOMC meeting could have a higher final rate than the one that was announced in September. Although this might not come as an issue given Powell's comments from yesterday, where he stated that the Fed is not finished, there are "ways of going" to bring rates down to a point that is considered to be "sufficiently restrictive." It appears that the debate about the final rate of central banks has shifted to not being about the direction taken and the final goal.