Feigning Surprise, This Is Equity Movement After the FOMC Meeting

 There were no special surprises from the Federal Reserve (Fed) when interest rates were raised by 75 basis points yesterday, bringing the central bank's total monetary policy tightening to 3.25%.


In fact, Fed President Jerome Powell continued to be hawkish during the FOMC meeting saying that interest rates are expected to reach 4.4% by the end of the year and 4.6% by 2023 to achieve the inflation target below 2%.


As a result, the equity market which showed a slight increase before the FOMC meeting retreated while Treasury Yields and the greenback surged higher after the Fed announcement.


Looking at the Wall Street index chart, the Dow Jones Industrial fell 1.7%, at 30,183.78, the S&P 500 lost 1.71%, at 3,789.93 and the Nasdaq Composite fell 1.79% at 11,220.19.


Europe's STOXX 600 index closed 0.90% higher after it hit a July low following Russian President Vladimir Putin's announcement of military moves.



In Asia, Japan's Nikkei 225 slipped 1% while the Topix fell 0.78% while South Korea's Kospi lost 1.12% and the Kosdaq fell 1.41%.


Overall, MSCI's gauge of global shares fell 1.55% while MSCI's broader Asia Pacific index outside Japan slipped 0.46%.


Summary on the dollar, the greenback index rose 1.026% with the Euro down 1.27% at $0.9843 and the Yen weak 0.19% at 143.98 per dollar.


The 10-year Treasury note yield hit a record high of 3.6401% and the 2-year yield hit 4.123%, the highest level since October 2007.


The inversion of the 10-year and 2-year curves, a difference of 53 basis points, indicates that a recession will be present in another 1 to 2 years.


For commodities, the FOMC impact sent Brent futures down 79 cents at $89.83 while WTI fell $1 at $82.94 while gold futures rose 0.3% at $1,675.70 an ounce and Bitcoin (BTC) jumped 0.04% at $18,886.

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