The Federal Reserve raised interest rates in a move that wire commentary described as hawkish, and the Bank of Japan followed with a rate increase of its own. Despite the BOJ hike, the yen slid, while the dollar held its gains — a sign that traders read the Fed's tone as more consequential for currency markets than Tokyo's move.
The reaction split assets. Euro zone government bond yields were on track for a weekly decline as what commentary called a "post-Fed rally" eased fears about duration risk (sensitivity to long-dated bonds). Commentary also noted gold has not been rattled by the prospect of higher rates, suggesting some investors are hedging against the chance the Fed is not finished.
What remains unresolved is the path from here: whether the Fed delivers two more hikes, three, or has started a longer tightening cycle. That question is now the central swing factor for rate-sensitive equities and currency pairs going into the next policy meeting.