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The rate hike was the first rate hike since the Fed took the Fed Funds rate up a quarter percentage point from zero percent in December 2015. Despite this raft of data, markets will likely continue to overlook short-term focused monthly data releases in favour of the broader political and macroeconomic picture, with two rate hikes from the U.S. now fully priced in for next year.

LONDON, Dec 20 (Reuters) - The dollar bounced back towards 14-year highs on Tuesday, boosted by upbeat comments by the chair of the Federal Reserve that kept alive market expectations for a faster pace of US interest rate hikes next year than had previously been forecast.

We had been pounding the table for some time on the critical importance of the December "dot plot" from the Federal Reserve, where every Committee member is asked to contribute his or her view on the most likely path of Federal Reserve interest rates over the next three years. Will this have an effect on equities and the S&P 500 (INDEXSP:.INX) into 2017?

The chart above illustrates the extreme growth in this dollar-denominated debt, which has increasingly connected US monetary policy and exchange rate movements with the financial markets of emerging market economies. Given strong seasonal tailwinds and improving breadth any near-term weakness that does emerge is likely to be limited in degree and duration.

The US is a major source of capital for frontier and emerging markets like Kenya, which makes Fed interest rate movements important.

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Where the market goes to from here is anyone's guess, however with the global economy integrated like never before a rise or fall in the DOW could be dependent on events in Asia or Europe and not have anything to do with who heads up the U.S. presidency.

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"If growth does accelerate, the markets will begin to worry that the Fed may be "behind the curve" of rising inflation expectations". Ofcourse, the broader economic conditions are far too different this time and the party might be over on cheap interest rates, especially mortgages.

Federal Reserve Chair Janet Yellen said Monday that college graduates are entering the strongest job market the country has seen in almost a decade, and their degree is more important than ever. In a bit of a surprise, it also increased its longer-term forecast for interest rates.

The BOJ on Tuesday affirmed its twin targets of minus 0.10 percent interest on some excess reserves and a zero percent 10-year government bond yield.

Headline inflation stands at 1.4 percent, well below the Fed's 2 percent goal.

Japan's Nikkei stock index .N225, which has benefited from the yen's sharp fall against the dollar, snapped its nine-day winning streak, edging down from Friday's one-year high.

Donald Trump was elected on a promise to create "millions of really good paying jobs" by lowering the corporate tax rate and reducing burdensome regulations, which he says will reverse the offshoring trend and bring jobs back to this country. And this is testament to how bond issuers are taking advantage of the current low interest rate scenario and how they have eagerly and hurriedly issued fresh debt before the possible eventual rise in borrowing rates.


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