Markets rally after Fed hikes rates, crude jumps

Markets rally after Fed hikes rates, crude jumps

US stocks rallied and Treasury yields fell on Wednesday after the Federal Reserve raised interest rates by 50 basis points as expected and said it would begin to reduce its balance sheet in June in a decision seen as less hawkish than some feared. The US central bank set its federal funds rate to a range between 0.75 per cent and 1 per cent in a unanimous decision that gave the benchmark overnight rate its biggest bump in 22 years. There was little initial reaction to a policy statement that mostly met expectations. But when Fed Chair Jerome Powell said the Fed was not “actively considering” a 75 basis-point rate hike, stocks rallied and bond yields reversed earlier gains. “The key turning point was when he said they were not actively considering 75 bps,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments. “At worst, the Fed wants to meet market expectations. At best, they want to go slower or lower than what the market was pricing,” he said. The dollar index fell 0.86 per cent and the euro rose 0.89 per cent to $1.0614, while the yield on 10-year Treasury notes fell 3.1 basis points to 2.927 per