The Fed says essentially nothing. Equities get a little creeped out.

Stocks were off to a pretty strong start to Wednesday's session, aided by August retail sales rising for a fourth straight month. However, cue the widely-anticipated Fed meeting conclusion, and the S&P and Nasdaq dropped to close the day in negative territory whilst the Dow held on to a 0.1% gain.

The Fed said little however, leaving rates unchanged and keeping the bond-buying programme the same. There was nothing mentioned about buying up long-term treasuries nor any sense that they would try and control the yield curve. Investors, it would appear, realised that the Fed has done all it wanted to do for now, and is perhaps not overly dovish after all, and thus led to the market giving back some of its gains.

The one thing the Fed did do that came somewhat as a surprise was to provide a glimpse into the outlook for 2023 - something not expected until November or December. They see unemployment at 4%, Core PCE inflation at 2%, and interest rates - still - at 0% until at least the end of 2023. As the chart below shows, FOMC voters were unanimous in their belief that rates should remain at 0%.

The prospect of improved growth sent longer-term yields higher, with the 30-year rising most and the 10-year nudging up to 0.69%. The positive forecast also led to gold and oil moving higher together with the materials, industrials and bank stocks.

If this stronger growth outlook does come to fruition, or drives investors to believe this will be the case, we could continue to see the outperformance of cyclicals vs growth, a trend that has been gaining momentum over the last couple of weeks.