FED Decision Has Been Good for Global Markets

Fed decision has been good for global markets. After the decision, global stock markets reached record levels.

Global stock markets headed towards record levels after the FED (US Federal Reserve) announced that it would realize its asset purchase reductions at the level expected by the financial markets and would be patient about interest rate hikes. The MSCI World Index rose 0.12 percent to its historic high. In the USA, the S&P 500 index finished the day at a record high by 0.65%, and the Nasdaq 100 climbed more than 1%. Dow Jones and Russell broke the record in 2000. The upward momentum continues in futures trading this morning. In Asia, Japanese Nikkei, Chinese CSI 300 and South Korean indices are on the rise. In addition, the yield curve in the USA became steeper after the FED decision. Nancy Davis, CIO of Quadratic Capital, predicts that it makes sense to begin a reduction in asset purchases and will allow the yield curve to steepen and normalize. On the other hand, the US Treasury reduced the amount of quarterly sales of long-term bonds for the first time in 5 years. The US 10-year bond yield, which closed yesterday with an increase of 5 basis points, remained flat this morning, just below 1.60 percent. After the Fed's decision, inflation expectations in the bond market rose, while traders' expectations for the timing of the first rate hike remained unchanged. Accordingly, the first increase is expected in July and an increase of approximately 55 basis points is priced by the end of 2022.