Weekly Market Commentary 12/16/2016

The Federal Reserve’s much-anticipated policy meeting commanded the spotlight in the financial markets this week. Not surprisingly, the Federal Open Market Committee (FOMC) hiked the federal funds rate a quarter-point, the first increase since last December and only the second in a decade. The move had been telegraphed by Fed officials and priced into the markets for some time, so the immediate reaction to the increase drew more yawns than excitement. That said, the meeting was hardly a nonevent as evidenced by the continued spike in bond yields as well as the dollar in the two days following its conclusion. Clearly, nothing in this week’s batch of data -which on balance came in weaker than expected — justified this response.