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(Bloomberg) -- The Fed’s rate forecasts and statement struck a more hawkish tone than markets expected, analysts said in published research and interviews; central bank’s balance-sheet runoff may mean greater volatility going forward and higher yields over the next few years, said Charles Schwab’s Kully Samra and Mitsubishi UFJ’s Chris Rupkey.

• The dollar surged, while Treasuries slid, after the Fed set an October start for shrinking its balance sheet and stood by forecast for one more rate increase later this year; U.S. stocks were mixed; MORE
• NOTE: After FOMC’s statement was released at 2pm ET, market-implied odds of a rate hike in December moved to 58% vs ~45% just prior to the decision, based on Fed-dated OIS levels and 1.16% Fed effective rate

CIBC (Bipan Rai, in interview) 

• “The market has been caught wrong-footed in assuming that the Fed wouldn’t be raising rates again this year”
• Monitoring EUR/USD in 1.1850/75 area
• “A break below that mark would suggest a deeper corrective move is in play”  

Mizuho Bank (Sireen Harajli, in interview)

• FOMC decision will boost USD as markets reprice higher chance of December hike
• Expects USD/JPY to reach 115 by year-end on widening yield differentials 
  • “Yields are higher and the USD is stronger overall, which is consistent with the the December hike remaining in play”  
  • “At the same time, we believe that the EUR will continue to gain traction on better fundamentals and ECB tapering”

Mitsubishi UFJ (Chris Rupkey, in note)  

• Fed’s balance-sheet unwind may mean that 10Y UST yields go 40bps higher over the next few years; 10Y yields have already started their climb

Renaissance Macro (Neil Dutta, in note)

• “Not surprised” by market’s response, with bonds and equities selling off
• “We’ve long argued that the main threat to stocks is higher rates, not earnings”

Schwab (Kully Samra, in note)

• Fed’s “quantitative tightening” could cause volatility, given its impacts on economy are unknown
• Bull market should continue with “robust” data and solid corporate earnings
• MORE

TD Securities (Mark McCormick, in email)  

• Market was expecting a more dovish Fed
• Core view remains to fade dollar rallies; would look to buy EUR/USD on further pullbacks
• December hike depends on pricing and U.S. data outperformance, which will be “tricky” given distortions from recent storms

Bloomberg Intelligence (Carl Riccadonna, Yelena Shulyatyeva, Richard Yamarone, in note)  

• Biggest surprise was the adjustments to economic forecasts, which now call for stronger growth this year, a deeper plunge below full employment, and a longer timeline to achieving 2% inflation
• Policy makers are aiming for “as smooth of an execution as possible” and trying to avoid repeat of 2013 taper tantrum
• MORE

Evercore (Krishna Guha)

• Statement and projections are “hawkish on net”
• While FOMC signaled it will move forward on rates, it has “less distance to travel than it previously estimated”
• MORE

--With assistance from Lananh Nguyen and Katherine Greifeld. To contact the reporter on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Joanna Ossinger