Dollar climbs, bonds slide as Fed sees 2017 hike

Treasuries tumbled while the dollar surged after the Federal Reserve struck a more hawkish tone than markets anticipated. U.S. stocks were mixed.

Bloomberg’s dollar index rose the most since January after the central bank set an October start for shrinking the balance sheet and maintained a forecast for another rate increase this year. The 10-year Treasury yield approached 2.30 percent. The S&P 500 Index dipped below 2,500 before trading little changed. Banks rallied on the prospect for higher rates, while a slump in Apple Inc. dragged tech shares lower. Gold futures fell and emerging-market equities turned lower.

While policy makers left the benchmark interest rate unchanged, markets showed a hawkish reaction to officials’ forecast for where rates will be at the end of the year. U.S. central bankers are counting on steady growth and low unemployment to raise inflation closer to their goal, which would support their policy of gradual tightening through interest-rate increases and a reversal of quantitative easing.

Source: Bloomberg Pro Terminal

Jr Trader Alexander Kumanov

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