US stocks bounced back and government bonds softened on Monday, reversing some of the tumultuous moves last week that followed a Federal Reserve meeting where officials took a more hawkish tone on interest rates and inflation.
The S&P 500 closed higher by 1.4 per cent, a resurgence that came after it posted its worst performance in almost four months last week.
The yield on the 10-year US Treasury bond, which also dropped sharply last week, rose 0.05 percentage points to 1.49 per cent.
“What the market has priced in has eliminated completely the fears of a new inflationary regime that was the main narrative [before the Fed meeting],” said Alessio de Longis, senior portfolio manager at Invesco.
Fed policymakers on Wednesday projected that they would twice raise interest rates in 2023 from their record-low level. That marked a shift from a previous median forecast showing the first increase as far away as…