US treasury yields and dollar soar as Fed hikes rates for first time in a year

Second rate rise since December 2015

clock • 3 min read

In a widely expected move the Federal Reserve has increased interest rates by another 25bps, marking its first hike since last December, as the US labour market and economy continue to strengthen.

In a widely expected move, the Federal Open Market Committee (FOMC) has decided to raise the Federal Funds Rate in the US to 0.5%-0.75% following its December meeting. However, the market was surprised by the change in the Fed's forward guidance, with the central bank suggesting it will hike rates three times next year, instead of the two increases expected. The US dollar began to edge up against sterling following the news, trading 0.5% higher at £0.79241 immediately after the announcement. Meanwhile, benchmark 10-year treasury yields spiked 2.1% to 2.5228%.  The US stockmarket, h...

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