"Any action by the U.S. central bank tends to reverberate across the debt markets of developed countries, as many investors have European, U.S. and Japanese government bonds in their portfolio and switch between them when there are changes in yields".
"In view of realised and expected labour market conditions and inflation, the FOMC (Federal Open Market Committee) made a decision to raise the target range for the federal funds rate to 1 to 1.25 per cent", the American central bank said in a statement after concluding its two-day monetary policy meeting.
As the chart shows, yields in India, thanks to much lower inflation, a lower RBI policy rate and abundant liquidity, have been falling.
The euro declined against the dollar on Thursday for the second consecutive day as the dollar continued its bullish run after solid readings on the US economy helped strengthen the case for the Federal Reserve to continue tightening monetary policy this year.
Ms. Yellen and her colleagues on the Federal Open Market Committee have also done well to ward off a 2013 "taper tantrum"-like scenario by flagging the projected path of balance sheet normalisation - a deliberate and clearly calibrated set of reductions that increase over time - without detailing a schedule for the start of the process". The bank also said it would initiate cutting its bond assets and other securities in this year.
Markets are clearly still digesting the FOMC statement and Chair Yellen's comments. The yen's strength within the past month may pose a concern to the BoJ, and the central bank could potentially subdue rumors that it intends (or will be forced) to start winding-down its extensive stimulus program.
"China has also been growing a bit faster lately so they have their own reasons for possibly raising rates".
The Fed now sees the unemployment rate ending the year at 4.3 percent, where it sits currently, rather than the 4.5 percent previously expected.
As long as the economy "evolves broadly as expected", the plan "would gradually reduce the Federal Reserve's securities holdings", the committee statement said. The hike often won't translate into higher mortgage rates.
The Fed raises the interest rate for first time since the crises in December 2015 and policy makers acted in December 2016 and again in March. "Three percent is well above the current 10-year Treasury yield". "All markets are increasingly at risk", he wrote in his most recent investment outlook.
The moves seen in the aftermath of the Fed's tightening of monetary policy yesterday have extended, with the United States dollars finding supporting and UST yields drifting higher. In reaction to the hike, the 10-year yield hit a low of 2.103 percent, its lowest level since November 10, 2016.
The president wants $1 trillion worth of work on the ground and we expect to give it to him.
"Long-term rates, i.e., those that are likely to influence mortgage rates, are mostly unchanged", he says.
Based on the last time the Fed raised rates, from June 2004 to June 2006, traders should expect the yield curve to flatten.
On the surface, at least from the standpoint of inflation and unemployment, it looks like a success.