From Merrill Lynch Research, on the FOMC today and looking ahead (in brief, bolding mine):
- The hawkish tilt to today’s FOMC means the return of interest rate risk as a major concern for risk assets.
- The market is …in the process of pulling forward the expected first Fed rate hike toward the middle of next year
- The global weakness concerns that dominated the first part of October – and re-priced the Fed – are unlikely to derail the strong US growth engine
- Interest rate risk as US economic data continues to be strong
- The Fed … made several changes in the statement that were less dovish than some in the markets were anticipating, based on the price action immediately after 2 PM
- Our base case remains a June start to a very slow hiking cycle, with risks skewed to a later liftoff
