Finance

Fed keeps rates unchanged, to start trimming bond holdings in October

Fed keeps rates unchanged, to start trimming bond holdings in October

US bond yields rose, pushing up the USA dollar after the Fed's decision, but USA benchmark stock indexes were little changed.

The Dow Jones Industrial Average gained 41.79 to end the day at 22,412.59.

USA share prices recovered quickly from initial losses following the Fed's announcement, with the S&P 500 ending slightly higher, adding to a string of closing records.

But other regional indexes wavered, with South Korea's Kospi slipping 0.2 percent to 2,406.50.

The US dollar increased to 0.9698 Swiss franc from 0.9625 Swiss franc, and it moved up to 1.2357 Canadian dollars from 1.2272 Canadian dollars.

Warsh was a Fed governor between 2006 and 2011 and criticized the Fed's bond buying program, saying it would drive inflation sharply higher. Banks benefit from higher bond yields because it means they can charge higher interest rates on loans.

Asian stocks were mostly steady on Wednesday after Wall Street again rose to record highs, although movements were limited as a wait-and-see mood prevailed before the Federal Reserve reveals its monetary policy stance later in the day. [.] However, structural issues - namely still high global debt, an ageing global population and rising inequality - should help to keep a lid on yields and so support bond prices.

Mattis: No need to shoot down N. Korean missiles, yet
North Korea has said the tests are meant to develop the capability to hit USA territory with a nuclear weapon. It was the country's longest-ever test flight of a ballistic missile.

"The announcement was pretty much in line with what was expected", said David Chalupnik, head of equities at Nuveen Asset Management. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and worldwide developments. After the Fed's announcement, shares of many big banks were all up, lifting major indices.

With investors reacting to the signal for another rate hike and the start of the Fed's balance sheet normalization, the market does not appear to reflect the risks associated with U.S. The portfolio primarily consists of government and mortgage-backed bonds.

While the Fed admitted storm-related disruptions would have a short-term impact, it said it did not expect the Hurricanes Harvey and Irma would "materially alter the course of the national economy over the medium term". "The bond markets have fairly strong conviction that low inflation and low growth will persist", said Hiroko Iwaki, senior strategist at Mizuho Securities.

In gradually trimming some of the $2.5 trillion in Treasuries it owns, the New York Fed said it would "allocate that rollover amount across the month's maturity dates in proportion to total maturities" held on each date, the New York Fed said in a separate statement.

Citigroup, Bank of America, JPMorgan and Goldman Sachs were all higher in early trading.

In commodities, oil prices rose after Iraq's oil minister said OPEC and other crude producers were considering extending or even deepening a supply cut to curb a global glut, while a report showed a smaller-than-expected increase in US inventories. Chesapeake Energy added 15 cents, or 3.7 percent, to $4.19.

The caution in financial markets ahead of the Fed has kept some investors from making sharper adjustments to their positions despite potentially higher tensions over the Korean peninsula following hawkish statements from U.S. President Donald Trump overnight.


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