- With dovish signals from the Federal Reserve, Wall Street's massive cross-asset surge gained momentum, pushing the stock market closer to all-time highs and Treasury yields lower.
- Swap contracts show bets on 140 basis points of easing in the next 12 months. The Dow Jones Industrial Average closed at a record. Two-year yields dropped the most since March, down 29 basis points to around 4.44%. The dollar fell to its lowest since August. Traders cheered a tweak to the Fed's dot plot, with officials expecting to lower rates by 75 basis points next year - a sharper pace of cuts than indicated in September's projections.
- Following what was arguably the most significant Fed decision of 2023, Fed Chair Jerome Powell reiterated that policy has moved well into restrictive territory and said officials are proceeding cautiously because, while inflation may have eased, it is still too high. Powell said that inflation easing without an increase in unemployment is good news.
- Consumer prices on Tuesday highlighted a decline in the annual rate of inflation - even as monthly gains stepped up. Taken together, the results support the idea that inflation is heading back towards the Fed's objective. Data before to the decision showed producer-price growth slowed as energy costs plummeted.
- In an effort to maintain stability in the economy, Treasury Secretary Janet Yellen stated earlier on Wednesday that it would make sense for the Fed to think about cutting interest rates when inflation declines.
