Surprising Hot ETF Following the Fed Rate Hike

The National Financial Supervisory Committee recently forecast the Fed rate hikes, but small increases each time would not insert significant pressure on exchange rates.

After gaining support from weak United States data on Wednesday, there was a sharp reversal after the firm Fed policy statement as the dollar gained renewed support. The yield on the 10-year Treasury note was 2.12 percent, the same as shortly before the statement came out. Mortgage rates will be higher, as will credit card interest rates and vehicle loans. The Dow Jones industrial average rose 0.2 per cent, to a record 21,374.56.

In her post-meeting press conference, the Federal Reserve's chairperson, Janet Yellen, warned that the Fed could implement its balance sheet unwinding process soon if the economy continues to perform as expected.

Cashin spoke one day after Fed policymakers approved a 0.25 percentage point hike, the second increase of 2017 and the highest in nine years. They are just catching up with reality: The jobless rate has dropped with unexpected speed — to a 16-year-low 4.3 percent in May.

Copper fell 0.6 percent to $5,665 a tonne, having earlier hit a one-week low of $5,642, while Shanghai aluminium dropped 1.2 percent to $13,560 a tonne.

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To be sure, the Fed is still saying that inflation will head back up toward its 2 percent target. These rates are well below the Trump administration growth goals of 3 percent a year. The Fed raised its rate by a quarter percentage point on Wednesday to one-and-a-quarter-percent citing great progress in the US economy including an increased number of jobs and a drop in the unemployment rate.

While there has been some speculation that the People's Bank of China could follow suit, on Thursday China's interest rates for open market operations remained unchanged.

The Hong Kong Monetary Authority (HKMA) boosted borrowing costs by 25 basis points to 1.5 percent after the Fed raised its target range by the same amount. Neel Kashkari dissented the rate hike.

"The committee now expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated", the Fed said in its statement. Yesterday, the Fed hiked rates for the second time this year and hinted at curtailing quantitative easing to reduce the current $4.2 trillion portfolio in Treasury bonds.

Elsewhere, sofa chain DFS lost nearly a fifth of its stock market value after warning over profits as the General Election and an "uncertain macroeconomic environment" led to weak trading at its stores.

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