Key points
● Treasury yields have fallen, with the 10-year yield lower by 9 basis points to 2.50 per cent
● Market expectations for at least four Federal Reserve rate increases this year dipped to less than one-in-five
● Wall Street has extended gains, S&P 500 gaining as much as 0.9 per cent to 2,387.23
● US dollar falls across the board, with the dollar index down 1 per cent and the euro up 0.9 per cent at $1.0698
● Emerging market currencies rise, with the South African rand up 2.4 per cent against the greenback
● Gold is up up $16 to $1,215 an ounce
Financial markets have reacted swiftly after the US Federal Reserve on Wednesday tightened policy and signalled two further rate increases are likely for 2017.
While the Fed added to its December rate rise on Wednesday, it left its median forecasts for three rate rises in 2017 unchanged.
Leading up to the meeting, a string of upbeat economic data and hawkish remarks from a handful of Fed speakers had prompted some to expect the Fed’s ‘dot plot’ of interest-rate projections could be revised to reflect four rate rises in 2017, up from its previous estimates of three moves.
The median implies that rates will rise to 1.375 per cent by the end of this year and three-quarter percentage point increases in 2018.
Here’s a look at the dot plot in March:
