Markets mixed as Fed announces start of asset unwind

Markets were mixed on Wednesday.

The S&P 500 edged up less than 0.1 percent while the STOXX Europe 600 was flat and Asian stocks were mixed.

The US 10-year Treasury yield rose to 2.27 percent after the Federal Reserve ended its monetary policy meeting by announcing that it would start to shrink its assets in October.

“The unwinding of the balance sheet will dominate markets for at least the next two years and cements our outlook for higher rates,” said Bryce Doty, senior portfolio manager at SIT Investments.

“Even though this is a slow and deliberate and thoughtful unwind plan, it is not without its potential to rattle markets,” said Kristina Hooper, global market strategist at Invesco.

The impending drawdown in Fed assets comes after a renewed surge of optimism among US investors, with the Wells Fargo/Gallup Investor and Retirement Optimism Index rising from +124 in the second quarter to +138 in the third quarter, its highest level since September 2000.