The S&P 500 rose to a record high on Wednesday as the Fed remained fully supportive. The Fed as expected left rates unchanged and remained committed to its bond-buying program. It is clear that the Fed sees the economy recovering but that it has some time to go before any pullback of supports is warranted.

The Fed says the US economy is still a long way from full employment and that any inflationary effects are likely to be transitory. Some sectors hit by the pandemic are still weak but are improving. 

The Fed also said again that it does not have a problem if inflation exceeds its 2% target for a short period as it continues to focus on a return to strong economic growth and full employment.

Market Reaction

The S&P 500 rose to a record high of 4201 during Wednesday’s session, continuing a record run of record-setting! Risk on is the order of the day as the Fed continues to do all it can to support US economic recovery. The yield on the US 10 year falls to below 1.63% having spike to 1.66% just after teh Fed rate decision.


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