Video summary
The Federal Reserve has officially raised interest rates for the first time in three years, marking a unanimous decision to move the benchmark rate into the range of 3.75% to 4%. This action was taken unanimously by committee members who aim to demonstrate their serious commitment to combating inflation and convincing the market that they are fully aligned on this issue. Looking ahead, the data suggests that momentum for further hikes remains strong, with sixteen out of eighteen officials expecting at least one additional rate increase before the end of the year. Furthermore, four officials anticipate two more hikes, which would result in a total of three consecutive increases over the final three meetings of the year, pushing the median forecast for rates to 4.1% by next year.
Despite this aggressive monetary tightening, the stock market showed resilience, with the Nasdaq managing to recover from earlier losses and finish the session flat after gaining significant ground before the rate announcement. The Dow Jones Industrial Average suffered a decline of 632 points, dropping by 1.2%, while the Russell 2000 index managed to save itself near the close of trading, bouncing up by 1% in the last half hour. Meanwhile, bond yields continued their upward trajectory as prices fell; the 10-year Treasury yield climbed to 5.02%, and the 2-year yield also rose as the market priced in the likelihood of future rate increases, indicating that there is no immediate relief for investors seeking lower borrowing costs.
The rise in interest rates and the strengthening dollar index, which stood at 100.24, had a noticeable negative impact on precious metals, causing gold to drop by approximately $23 or half a percent and silver to decline by a similar margin. In the broader equity landscape, the GDX fund also experienced a downturn, falling by 1.4% as the session drew to a close. Overall, while the Fed's unified stance signals a firm resolve to tackle inflation through higher rates, the market is currently digesting these changes with mixed results across different asset classes, leaving investors to wait and see if this policy shift will successfully steer the economy back toward the committee's 2% inflation goal without causing prolonged market instability.
Read the full video transcript
This is T F N N the tiger financial news
network.
T F N N headline news [music] update.
>> Good afternoon folks. Tommy O'Brien
coming to you live from T F N N. We
reached the closing bell on Fed day and
the Fed they hike rates folks for the
first time in 3 years. So you're talking
about a benchmark rate that's now going
to be 3.75 to 4%. It was a unanimous
decision. Now pardon me.
Being a a gambler a trader, okay,
talking about game theory, talking about
representing, right? The strongest hand
that you can.
Pretty interesting that they go
unanimous. Everybody on they're trying
to bring it. They're trying to tell the
market we are serious about inflation.
We are all on board. We'll see if they
carry through. Okay, because the dot
plot, yeah, 16 of the 18 officials
expect at least one more hike
by the end of this year.
Four of them
talking about two additional hikes. That
would be hike hike hike for the final
three meetings folks. The median
forecast is 4.1% now, which is 3.75 was
where they were in June.
Okay, the median official saw rates
remaining at 4.1 in 2027.
Yeah. Now 4.1 would basically mean one
more hike.
All right, cuz then their range would be
about 4 to 4 and a quarter percent 4.125
being the middle of that range, but
eight officials see it as high as 4.4%
through next year.
So that'd be two more hikes carrying
through next year.
And yeah, we'll support a timelier
return to the committee's 2% goal. So we
get a hike, we get the first hike in 3
years and you got a Nasdaq that does get
to positive territory. How about claw
it? Now, you were positive by 200, 300
points coming into that number, but
nonetheless, you clawed back and the
NASDAQ is flat on the session. Dow gives
up 632 points off 1.2%. You got the
Russell. Russell saved itself at the end
of the day there. You just bounced 1% in
the Russell in the last half hour of the
trading day. You got yields. The
10-year.
Yeah.
No reprieve whatsoever, folks, as the
10-year pushes to lower price, higher
yield. We're at 5.02.
5.02.
Now, you jump to the 2-year.
Lower price, higher yield as the market
prices in hikes. You jump over to the
dollar. You get the dollar index right
now, 100.24.
That's weighed on metals with gold down
by $23 or half a percent. Silver down by
half a percent as well. And you get
[music] the equities. Little bit of a
bid to close out the session with GDX
down 1.4%.
Folks, thanks so much for tuning in.
You night. Spend you night. Enjoy it.
Enjoy that time, folks. We'll [music]
see you tomorrow morning for the morning
market kickoff at 9:00. Have a great
night, folks. Thanks so much.