This post was originally published on this site.The Fed raised rates by 25 bps as expected yesterday and signalled another rate hike by year-end. The market reaction was hawkish with stocks, bonds and gold falling and the US dollar rising. But was the outcome really that hawkish or the market just overreacted to nothing? Let’s see how it compared to the prevailing market pricing, consensus and past commentary. STATEMENT  The most notable changes in the statement were the vote split and the framing around inflation. The consensus was for one or two members dissenting in favour of a hold, but...

This post was originally published on this site.European stocks are opening firmly higher, extending the relief move from yesterday: Eurostoxx +0.7% Germany DAX +0.8% France CAC 40 +0.5% UK FTSE +0.9% Spain IBEX +0.7% Italy FTSE MIB +0.7% The main story to start the session is that markets are taking some comfort from the reaction in the long-end of the bond market after the Fed. The central bank raised rates by 25 bps to 3.75%-4.00% and maintained a hawkish message, but 10-year Treasury yields have stayed around the 5% mark rather than breaking sharply higher. Why does that matter exactly? Heading into...