Thursday, December 19, 2013

Economic Journal - Thursday, 12/19/2013

(As of 7:10 am PST)
 
Stocks are retreating after yesterday’s rally as investors digest Fed decision to taper bond purchases.  At 2 pm EST yesterday markets were greeted with a statement from the FOMC signaling that the Federal Reserve would begin tapering back its asset purchases to the tune of $10 billion a month starting in January.  Markets cheered the decision and welcomed the Fed’s increasing confidence in the US economy.  Investors also cheered the accommodative stance signaled by the central bank by its assurance that short term interest rates would remain low through and beyond the tapering process.  As far as the scale and pace at which the Fed will cut back its $85 billion-per-month stimulus program, Chairman Ben Bernanke stated those decisions would remain data dependent.  It was quite an afternoon for the markets and for Mr. Bernanke who answered questions about the Fed’s decision in a nearly 2 hour press conference, his last as chairman of the Federal Reserve.  Economic reports today are slightly disappointing.  Jobless claims rose to their highest level since March and US existing home sales declined for the third straight month in November.  A sharp move downward for gold has investors attention, with the precious metal breaking through $1200 per ounce as the Fed taper sinks in.  Interest rates and the US dollar are also moving higher with the 10 yr. treasury approaching 3%. 

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