Given the fact that bank liquidity has returned and that banks can now borrow from each other, the Federal Reserve has come up to the decision that the discounts rate can be raised by 25 basis points. This will be the first rate increase ever since the Federal Reserve lowered its main policy lever (the overnight interbank lending rates)  to near zero in Dec 2008 in order to battle the recession war.

The financial market’s reaction to the proposed increase in the discount rate from 50 basis points to 75 basis points said it all. While on one hand the global stocks and commodity prices tanked, on the other hand US dollar value soared and the Wall Street went on to close their best week of the year. Be it DJIA, S&P, NASDAQ or MSCI all had their share of pain and pleasure.

For records DJIA rose by 9.45 points, or 0.09 percent, and finally closed at 10,402.35; S&P's 500 Index increased by 2.42 points, or 0.22 percent, and managed to close the day at, 109.17; while NASDAQ's composite index was up 2.16 points, or 0.10 percent, and ended at 2,243.87.The MSCI world equity index was the only one to decline which fell by 0.48 percent.  

Considering the fact that the rate hike does not in any way indicate a monetary policy shift the US Treasuries too rebounded from early losses.