Fed Hikes Rates Amid Ongoing Inflation Concerns

Global markets absorbed the first Federal Reserve rate hike in three years, as investors digested the implications of tightening monetary policy.

The U.S. Fed raised its benchmark interest rate by a quarter percentage point to 3.75%-4.00%, with Chair Kevin Warsh emphasizing that inflation remains elevated and continues to warrant a restrictive stance.

In the United States, equities closed 0.06% lower, while in Canada, returns were positive at 0.34%. European equities finished 1.47% lower, pressured by energy-led inflation worries and higher sovereign yields.

The front end of the curve saw significant movement, with 2-year Treasury yields rising 17 basis points to a high not seen since 2023.