The post-Fed optimism will not last long

Equities jumped after the Federal Reserve (Fed) raised rates by 75bp yesterday.

The US yields eased as the Fed hawks scaled back their expectations to a softer reality, and the US dollar index came down from a fresh two-decade high.

The futures were in positive at the time of shooting and are already in the negative as a confirmation that the post-Fed optimism will not last long, as the economic picture and the Fed news are, in fact, less than ideal.

We will likely continue seeing choppy market conditions. One good news is the softening oil prices, as investors price a higher chance of recession, which would curb oil demand and ease prices.

The aggressive hawkish shift in Fed policy, the rising US rates and the soaring US dollar are not a gift for the other central banks.

The European Central Bank had an emergency meeting yesterday, to discuss how to slow the soaring bond yields after they announced the end of the asset purchases program last week, but more importantly how to prevent the peripheral yields from soaring faster than the core yields. We watch two other monetary policy meetings today, the Bank of England (BoE) and the Swiss National Bank (SNB). The BoE is set to raise the bank rate for the 5th straight meeting, while the SNB has no reason to hurry to the exit.