Weekly Commentary – Fed’s minus show argument of tapering
Federal Open Market Committee’s latest minutes showed officials suggested the Fed should exit the market or at least “tapering” early. Even though Fed continued its bond purchasing program in October meeting, “tapering” is not so far in expectation, according to minutes from October meeting released last Wednesday. U.S. equities stop to rise after the release of the minutes and 10-year treasury yield rose to 2.8% last Wednesday.
In the minutes, officials changed their attitude to scale back QE3. “Many members” agreed current data-dependent nature of bond purchase program, but “some” pointed out that the committee could decide to ‘taper’ soon unless economic condition was awful. “Several” said extra qualitative information could be considered after unemployment rate reached 6.5%. Moreover, The Fed had discussed how to taper QE3 according to the minutes.
Currently, the market is very sensitive to Fed’s action, and the argument will continues until Mr. Bernanke passed his duty to Mrs. Yellen.
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