The Federal Reserve changes direction and officially reopens the rising season. With a unanimous decision, the US central bank increased by 25 basis points the cost of money, bringing the federal funds rate into the range between 3.75% and 4%.
It is the first increase since 2023, but for the markets the news is not just the quarter of a point decided in Washington. What is changing is the perspective: American inflation remains high and the tightening may not be over.
The reaction was immediate. The dollar strengthened, the 10-year Treasury yield reached 5%, gold fell to the $4,240 area and Wall Street closed lower. Movements that also affect those who own BTPs, funds, ETFs or shares listed on Piazza Affari.
The Fed’s decision in five numbers
| Indicator | Level or variation | Because it matters |
|---|---|---|
| Fed rates | 3.75%-4% | Money becomes more expensive in the US again |
| Rise | +0.25 points | It is the first increase since 2023 |
| 10-year Treasury | about 5% | Highest since 2007 |
| Spot gold | approximately $4,240 | It lost more than 1% |
| Euro-dollar | area 1.15 | The stronger dollar impacts European wallets |
In the official press release of the Federal Reserve, the FOMC explains that the American economy continues to grow at a solid pace. Consumption, investments and the labor market remain resilient, while inflation is still too far from the 2% target.
The favorable vote of all twelve members signals that the increase was not a marginal decision. Even the New economic projections from the Fed leave open the possibility of another intervention before the end of the year.
Because the American rise can involve BTPs
The Fed does not decide Italian rates and does not directly control the yield of BTPs. The monetary policy of the Eurozone depends on the European Central Bank. The bond market, however, is global.
When a US Treasury that is considered relatively safe offers a yield close to 5%, it becomes a stronger competitor to bonds issued by other countries. To continue to attract capital, European bonds may also be pushed to offer higher yields.
The decisive step is the inverse relationship between yield and price: when the yields required by the market rise, the value of bonds already issued at a fixed rate tends to fall. The mechanism mainly concerns securities with longer maturities.
BTP, dollar and stock market: who profits and who risks
| Saver or investment | Possible consequence |
|---|---|
| Who buys new BTPs | May find more attractive returns |
| Who keeps BTPs until maturity | Continue to receive the expected coupons, subject to the risk of the issuer |
| Who sells BTP before maturity | He may suffer a loss if the price has decreased |
| Who owns uncovered US securities | It can benefit from the stronger dollar |
| Technology stocks and indebted companies | They may be affected by rising rates |
| Italian companies exporting to the USA | They can get an advantage from the exchange |
| Companies that purchase in dollars | They risk higher costs on imports |
It’s not enough to read that yields are rising to establish whether the news is good or bad. Opportunities can be created for those who invest new money. For those who already own long-duration bonds and need to sell them, the move can produce losses.
Furthermore, it weighs on the BTP spread, i.e. the premium required compared to the German Bund. The Italian yield depends both on the general trend of rates and on the assessment of Italy’s specific risk.
Because the dollar goes up and gold goes down
Higher US rates make dollar investments more profitable and can increase demand for the US currency. For an Italian saver who owns shares or funds denominated in dollars, the exchange rate effect can amplify the investment result. However, it could also reduce it if the euro strengthened again.
Gold undergoes the opposite dynamic. It does not pay coupons or interest and becomes relatively less attractive when government bonds offer higher yields. A strong dollar also makes the metal more expensive for those using other currencies.
After the Fed’s decision, the spot price fell by more than 1%, all the way to the area $4,240 an ounce. The correction does not eliminate the factors that supported gold, such as geopolitical tensions and central bank purchases, but increases the risk of fluctuations after the previous strong rise.
What changes for shares
Wall Street reacted negatively: the Dow Jones lost more than 1%, while the S&P 500 and Nasdaq limited the decline to a greater extent.
Higher rates reduce the present value of future earnings and can especially penalize technology companies with high valuations. Even highly indebted companies risk higher financing costs.
Banks can benefit from wider interest margins, but only as long as they do not increase the cost of funding and the risk of customer defaults too much. It is therefore not automatic that every rate increase benefits the banking sector.
Italian mortgages do not depend directly on the Fed
The American rise does not automatically cause an increase in Italian mortgage repayments. Variable rate loans depend above all on Euribor and ECB policy; those at a fixed rate are mainly linked to the performance of the IRS.
The Fed can only exert an indirect influence: Persistently high global yields can increase financing costs and pressure on the entire bond market.
What a saver needs to check now
The Fed’s decision does not require immediate buying or selling. However, it is advisable to check the duration of the bonds, the possible need to recover the capital before maturity and the exposure to the dollar.
The next US data on inflation and employment will indicate whether another rise is really probable. For Italian savers, the essential point remains to distinguish between yield and price: higher rates can offer opportunities on new investments, but temporarily reduce the value of those already present in the portfolio.
