Fed Raises Rates, Sparking Treasury Yield Surge and Gold Sell-Off

The Federal Reserve made its first policy-rate adjustment since 2026 by raising the target range for the federal funds rate from 3.50%, 3.75% to 3.75%, 4.00%, a 25 basis point increase.

This move was anticipated, and market reactions were significant. Yields on U.S. Treasury notes rose sharply, with the 10-year yield jumping above 5%. The U.S. Dollar Index strengthened, while gold prices plummeted, falling below $4,320 per ounce.

The Fed's decision to raise rates was in line with expectations, and Chairman Powell noted that financial conditions are not restrictive. However, inflation remains a concern, and the central bank is focused on bringing it down to target levels.