The market has spent seven years tethered to the Federal Reserve's every utterance, but now it appears ready to move on.
This may well have been the moment everyone on Wall Street has been waiting for.
Instead of recoiling in terror at the thought that the Fed not only is ready to hike interest rates but also is prepared to do so on a regular basis, the market essentially has shrugged. No wailing, no gnashing of teeth, just a general recognition that higher rates are in the future and that doesn't spell looming catastrophe.
Indeed, the notable part of the reaction was that there was so little reaction, even though the unmistakable momentum for a rate hike seemed to come out of nowhere.
"A March rate hike ... would mark the first time in years that the Fed raised rates when it did not obviously have to do so, in the sense that it was under no pressure either from markets or from its own prior signals to push ahead with an increase," strategists at Evercore ISI said in a note to clients. "This is interesting and in our view has informational content."
The move to hike in March is significant in large part because it indicates the Fed is on a more aggressive trajectory than the market originally thought. Amid the current economic and political climate — not to mention a national debt quickly approaching $20 trillion — a tighter Fed has many implications.
However, Evercore believes the hike should be interpreted not as hawkish, or signaling a more aggressive path to higher rates, but rather as a bullish indicator of confidence in the economy.