The highlight of the week was the FOMC meeting where the Fed was expected to raise interest rates by 50 basis points for the first time since 2000.
Leaving the question, what would forward guidance be?
The Fed did indeed increase their benchmark rate by 50 basis points but took the prospect of a 75-point increase in the coming meetings off the table. They suggested multiple 50-point hikes will be plausible depending on how the economy evolves.
The market rejoiced.
Bond yields moved lower as the odds of a 75-basis point increase were taken lower, although remain greater than zero.
Quantitative tightening will begin on June 1 with the Fed balance sheet falling by $47.5 billion per month. This level can rise to $95 billion after three months. These numbers were in line with market expectations.