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...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Economics / Markets

Trump's presidency and tariffs: Advice industry shares views

Trump's presidency and tariffs: Advice industry shares views

‘Stark raving mad’ but ‘great’ for US firms

Isabel Baxter
clock 18 February 2025 • 4 min read
Five-fold surge in advisers buying gilts for clients in 2024

Five-fold surge in advisers buying gilts for clients in 2024

AJ Bell finds 436% increase in gilt purchases on its Investcentre

Isabel Baxter
clock 10 February 2025 • 1 min read
Bank of England cuts interest rates by 25bps to lowest level in 18 months

Bank of England cuts interest rates by 25bps to lowest level in 18 months

First MPC meeting of the year

Sorin Dojan
clock 06 February 2025 • 3 min read