The market’s major anxiety for the second half of the year will be the same one that has it freaking out now: When is the Federal Reserve taking away the punch bowl? And can stocks party on without it?
Every major asset class has been whipsawed by volatility ever since Fed Chairman Ben Bernanke said the central bank could start pulling back on its bond-buying program (also known as quantitative easing) sooner rather than later.
The Fed is buying $85 billion in longer-dated Treasuries and mortgage-backed securities every month to tamp down interest rates and encourage spending on everything from homes to cars to capital goods.
The fear is what happens to asset prices and the economy without it?
The market’s bracing for Bernanke to start pulling out of QE as early as the fall, but as the Fed chief said himself, any kind of monetary tightening depends on whether the economy can take it.
Here are five economic reports the normally dovish Federal Reserve will be watching like a hawk for clues as to whether it’s safe to start tapering its bond-buying program: