Market sentiment was buoyed as the Fed delivered a hawkish policy statement, Spain showed commitment on fiscal reduction and EU finance ministers approved the next tranche of Greek funding. Wall Street rallied with the DJIA and the S&P 500 indices gaining +1.68% and +1.81% respectively. In the commodity sector, oil prices changed little but gold remained weak. The benchmark Comex contract for the yellow metal initially plunged to 1662.1, the lowest in almost 2 month, before rebounding to 1694.2, down -0.33%.

The Fed delivered a more hawkish statement after the March meeting. Policymakers acknowledged improved economic conditions since the last meeting as the 'unemployment rate has declined notably in recent months', although it 'remains elevated' Business fixed investment has 'continued to advance'. In the previous statement, it was described as 'slow'. Growth in the coming quarters will be 'moderate', improved from 'modest' as stated at the last meeting. Concerning inflation, policymakers anticipated that it will be 'at or below' mandate-consistent levels in the long run.

Changes in languages in several areas indicated that the central bank has turned more confident in the economic outlook. This has in turn lowered speculations for further QE later this year. The Fed decided to left the Fed funds rate unchanged at 0-0.25% at least until late 2014 and to continue operation twist announced in September.

In the Eurozone, finance ministers approved the new deficit target, now at 5.3% of GDP, for Spain. The Spanish government last week unilaterally announced that it would miss the deficit target of 4.4% of GDP and stated a new target of 5.8%. After negotiation between EU ministers and the Spanish government, the final target is 5.3%, meaning a further cut of 5B euro. While this is not a very positive outcome, this at least has shown the Spanish government's commitment to implement austerity measures.

Meanwhile, it's reported that the European Commission is working to expand the firepower of the rescue fund. EU Economic and Monetary Affairs Commissioner Ollie Rehn said that the Eurogroup would agree to increase the size of the present 500B euro rescue fund lat1er this month. At the G-20 meeting, countries outside the 17-nation region have urged the Eurozone to improve the firewall before they would inject more money to help the debt-ridden European countries.