During this 4th of May Fed raised interest rates by 0.5%. This is the first raise since 2000. Further raises have been prefigured since the committee anticipates that an ongoing increase in target range will be appropriate.
Supply and demand imbalances push inflation up, translating into higher energy prices and broader price pressures.
Here is in detail how the market reacted to this news.
Treasury Yields for the Bond Market vary among 0.0036 and 0.061. The worst variation has been recorded for the United States 30-Year while the best for the United States 1-Month.
United States 1-Month Treasury Bond increase of 0.033, its yield is now around 0.4488. During the last session the 3 Months Bond surged by 0.023.
As a consequence, the 1-Year Bond went up by 0.05 making the 5-Year Treasury Bond reach by 0.017 and, accordingly, the 10-Year Bond rose up by 0.019.
While the most conservative 30y is usually perceived by investors as the most reliable, experiencing a variation of 0.011 and in general an year-to-date movement of 0.5835.
The 10-year U.S. Treasury yield climbed to 2.97% on Thursday morning, after the Federal Reserve raised interest rates by 50 basis points, its biggest hike in more than two decades.
“No big surprises today as the Federal Reserve Bank raised interest rates by 50bp, even though this is the biggest rate hike since 2000, a move that had been well flagged ahead of the policy meeting. The market was looking for indications as to future moves with Fed speakers talking of a series of 50bp or larger moves going forward. The Fed is clearly facing a tough balancing act between countering inflation and trying to initiate a soft-landing. The Labour market remains strong with yesterday’s Job Opening figure at an all-time high and the unemployment rate likely to come in at 3.5% on Friday. The Fed stated that ongoing increases will be appropriate but did not commit to levels”.
Chris Wilgoss, Head of Global Markets Treasury, Crown Agents Bank
