NEWSLETTER
Thursday / September 29Sep 29
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Fed hikes rates
The US Federal Reserve on Wednesday went for its first interest rate increase in more than three years.
The central bank's policymaking Federal Open Market Committee said it will raise rates by 25 basis points.
That will bring the rate now into a range of 0.25%-0.5%. The move will correspond with a hike in the prime rate and immediately send financing costs higher for many forms of consumer borrowing and credit.
The committee also expected in increases at each of the six remaining meetings this year, pointing to a consensus funds rate of 1.9% by year’s end. The committee sees three more hikes in 2023 then none the following year.
The rate rise was approved with only one dissent. St. Louis Fed President James Bullard wanted a 50-basis point increase.
Wall Street reaction
US stocks rallied after the Fed raised rates.
The Dow Jones Industrial Average rose 518.76 points, or 1.5%, to 34,063.10 after turning red initially after the release of the Fed statement. The S&P 500 added 2.2% to 4,357.86, and the Nasdaq Composite gained 3.7% to 13,436.55.
The 10-year Treasury yield touched its highest level since 2019 after the Fed’s statement. JPMorgan shares added 4.4%, while Bank of America added 3.1%.
Stocks started the day in the green following a Financial Times report that Ukraine and Russia have made “significant progress” on a peace plan.
Before the FT report, stocks were gaining on hopes that some sort of ceasefire was close. Ukrainian President Volodymyr Zelenskyy said a peace agreement was beginning to “sound more realistic” Tuesday. Russian Foreign Minister Sergey Lavrov told the BBC there was “some hope of reaching a compromise.” Russian State media quoting the Kremlin echoed similar sentiments overnight.
Ukraine aid
US President Biden announced Wednesday an additional $800 million in military assistance as part of the $13.6 billion aid package for Ukraine. It includes weapons the Ukrainians have been requesting, such as anti-armor and anti-air systems.
Ahead of signing the action, Biden said the US is "fully committed" to getting more weapons to Ukraine.
"What’s at stake here are the principles that the United States and the United Nations and across the world stand for. It's about freedom. It’s about the right of people to determine their own future. It's about making sure Ukraine never, will never be a victory for Putin no matter what advances he makes on the battlefield," he said.
While not addressing Zelenskyy's request for a humanitarian no-fly zone, Biden said the new package will supply Ukraine with 9,000 anti-armor systems, 7,000 small arms, 800 Stinger anti-aircraft systems, 20 million rounds of ammunition, and 100 drones, "so they can continue to defend their space."
The US Federal Reserve on Wednesday went for its first interest rate increase in more than three years.
The central bank's policymaking Federal Open Market Committee said it will raise rates by 25 basis points.
That will bring the rate now into a range of 0.25%-0.5%. The move will correspond with a hike in the prime rate and immediately send financing costs higher for many forms of consumer borrowing and credit.
The committee also expected in increases at each of the six remaining meetings this year, pointing to a consensus funds rate of 1.9% by year’s end. The committee sees three more hikes in 2023 then none the following year.
The rate rise was approved with only one dissent. St. Louis Fed President James Bullard wanted a 50-basis point increase.
Wall Street reaction
US stocks rallied after the Fed raised rates.
The Dow Jones Industrial Average rose 518.76 points, or 1.5%, to 34,063.10 after turning red initially after the release of the Fed statement. The S&P 500 added 2.2% to 4,357.86, and the Nasdaq Composite gained 3.7% to 13,436.55.
The 10-year Treasury yield touched its highest level since 2019 after the Fed’s statement. JPMorgan shares added 4.4%, while Bank of America added 3.1%.
Stocks started the day in the green following a Financial Times report that Ukraine and Russia have made “significant progress” on a peace plan.
Before the FT report, stocks were gaining on hopes that some sort of ceasefire was close. Ukrainian President Volodymyr Zelenskyy said a peace agreement was beginning to “sound more realistic” Tuesday. Russian Foreign Minister Sergey Lavrov told the BBC there was “some hope of reaching a compromise.” Russian State media quoting the Kremlin echoed similar sentiments overnight.
Ukraine aid
US President Biden announced Wednesday an additional $800 million in military assistance as part of the $13.6 billion aid package for Ukraine. It includes weapons the Ukrainians have been requesting, such as anti-armor and anti-air systems.
Ahead of signing the action, Biden said the US is "fully committed" to getting more weapons to Ukraine.
"What’s at stake here are the principles that the United States and the United Nations and across the world stand for. It's about freedom. It’s about the right of people to determine their own future. It's about making sure Ukraine never, will never be a victory for Putin no matter what advances he makes on the battlefield," he said.
While not addressing Zelenskyy's request for a humanitarian no-fly zone, Biden said the new package will supply Ukraine with 9,000 anti-armor systems, 7,000 small arms, 800 Stinger anti-aircraft systems, 20 million rounds of ammunition, and 100 drones, "so they can continue to defend their space."
