Today, the Fed showed signs that it would slow down its action to stimulate the economy. Apparently the Fed has decided to slow down its bond buying programs because the economy has showed signs of improvement.
However, apparently Wall Street wasn’t as agreeable with this deal. According to an AP piece, traders started selling stocks and bonds after the minutes were released.
This caused the yield on a 10-year treasury note to rise from 2.16 percent to 2.3 percent. This is pretty significant because the yield has an inverse relation with its price. As the yield rises, the price drops.
The Dow closed today at 13,199 falling about 133 points throughout the day, 65 points lower from yesterday.
This seemed to be exactly what the Fed was trying not to do. They were so sure of the economy, so it stopped its policy of trying to stimulate the economy, only to have the Dow drop at the end of the day.
However, the Fed’s decision seems to be justified. They decided to do this with the recent drop in the unemployment rate. It is now at 8.3 percent, but, according to the article, Ben Bernanke says he doesn’t expect the unemployment rate to continue dropping at its current rate.
Billy Crosby
No comments:
Post a Comment