US Government Bond Prices Fall After Fed Announcement

Industrial companies, including airlines, led the gainers Wednesday.

During the 2008 financial crisis, Washington slashed the key interest rate almost to zero in a bid to boost growth and jobs.

The New Zealand dollar gained 0.6 per cent to US$0.7360 after reaching its highest level in 6-1/2 weeks as one poll showed the country's National Party pulled ahead of the rival Labour Party ahead of a general election this weekend.

U.S. benchmarks were nervously to-ing and fro-ing ahead of the Fed's monetary policy update.

The Fed's plan should slowly eat away at both its $2.5-trillion in Treasuries and $1.8-trillion in mortgage-backed securities (MBS) over the next few years, drawing the balance sheet down to somewhere in the range of $2.5-$3.5 trillion, according to Fed officials who say there is no need to decide the landing spot now. Since December 2015, the Fed has modestly raised the rate four times.

The Fed's announcement on another interest rate hike this year took markets by surprise as a series of poor inflation readings had dampened expectations for such a step.

Anadarko Petroleum rose 4.3 percent after the oil producer said it would spend US$2.5 billion to buy back its stock.

However, with the CBOE Volatility Index .VIX closing at its lowest level in almost two months at 9.67, Peter Cecchini, chief market strategist at Cantor Fitzgerald in NY, said the market is not reflecting risks such as U.S. USA shares were set to be little changed with Dow futures inching up less than 0.1 percent to 22,305.

On Thursday, ECB President Mario Draghi said monetary policy is not an appropriate tool to address financial imbalances but offered no fresh insight on the central bank's asset purchase program.

Political uncertainty may have a part to play in the BOJ's thinking. "There could also be some more political action in Japan before long, as the media is suggesting that (Prime Minister Shinzo) Abe may call a snap election next month amid his rising approval rating and fragile opposition".

European Central Bank policymakers disagree on whether to set a definitive end-date for their money-printing programme when they meet in October, raising the chance that they will keep open at least the option of prolonging it again, six sources told Reuters.

Meanwhile, eased up 0.09% to 1.2336, its highest since September 6.

The S&P 500 is 0.18 lower 2,506. Shares of Google also were down 0.6 per cent. "So there's a little adjustment going on there", said David Joy, chief market strategist at Ameriprise Financial in Boston.

Tokyo stocks ended slightly higher on Thursday as banks and exporters chalked up gains thanks to a weaker yen, but Toshiba retreated as it faced a court battle over the $18 billion sale of its prized memory chip business.

Gold is sensitive to moves in the dollar. Spot gold was down 1.04 per cent at US$1,305.46/oz. "Higher prices for gasoline and some other items in the aftermath of the hurricanes will likely boost inflation temporarily".

  • Zachary Reyes


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