We mentioned Big Ben could be the wild card in the Fed’s final decision to taper or not to taper and Bernanke did what most on Wall Street figured he wouldn’t do. He slowed down the printing presses as the Fed cut back on its monthly bond purchases by $10 billion to $75 billion.
The market had been waiting for a taper cut and the Fed said all the right things as it also indicated that its key interest rate would stay at rock bottom levels even longer than previously anticipated. The overnight rates will stay near zero well past the period that the U.S. unemployment rate falls below 6.5%.
The market was down ahead of the Fed’s minutes and spiked even lower on the initial reaction but rallied on the news and surged to record highs into the close. (read more…)