The two-year Treasury yield closed at 4.738%, up more than seven basis points and the highest since 2024. It had been lower earlier in the session.
Markets had priced the hike at 92.5% odds on CME FedWatch. The surprise was not the move but what the committee put beside it.
The Fed raised the funds rate a quarter point to 3.75% to 4%, its first increase since July 2023. The vote was unanimous.
The median 2026 dot rose to 4.1% from 3.8% in June, and 16 of 18 officials see another hike this year. Money markets now put roughly even odds on October.
The Dow fell 631.21 points, or 1.21%, to 51,461.90, with Goldman Sachs down 3.92% and IBM down 4.32%, per CNBC. The S&P 500 lost 0.45% to 7,551.81 and the Nasdaq finished at 25,978.42, down 0.01%.
All three were higher before 2 p.m. ET. A 1.21% Dow loss against a flat Nasdaq is a rate-sensitivity split, not a growth scare, and it points to the same repricing the two-year delivered.
The 10-year ended at 5.016%, about two basis points higher, after posting its highest close since 2007 on Tuesday. That 5% handle is the level equities have been discounting for two weeks.
Overnight, the two-year eased one basis point to 4.72% and the 10-year and 30-year each fell about two. This afternoon's 10-year TIPS auction is the first real demand test since the decision.
WTI settled 3.2% lower at $102.43 and Brent fell 2.7% to $105.83. Saudi Arabia aims to restore roughly half its East-West pipeline capacity within days.
Gold traded near $4,270 after the decision, well under the 200-day average near $4,539 that IG flags as the recovery marker. Cheaper crude is the one input that could soften the inflation case the Fed leaned on, which makes it a rates story more than an energy one.
Initial jobless claims arrive at 8:30 a.m. ET, with consensus near 205,000. The Philadelphia Fed's September survey lands at the same time, seen in the low 30s after 47.4 in August.
August housing starts and building permits also print at 8:30 a.m., with permits expected at 1.40 million after 1.433 million. Pending home sales follow at 10:00 a.m.
With October priced near a coin flip, a firm claims number pushes the two-year back toward yesterday's high. The housing figures carry more weight with the 10-year sitting at 5%.
