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The Federal Reserve’s Ongoing Taper

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This year we have a new Federal Reserve head in Janet Yellen, but what we’ve seen so far has been a continuation of the central bank’s “taper” of its current bond buying program.

On March 19, the Fed announced it would reduce its asset purchases by $10 billion per month to $55 billion. More importantly, the Fed dropped its previous threshold of a 6.5% unemployment rate as the trigger that would prompt the first interest rate hike in years.

During her first post-FOMC release press conference, Yellen had a bit of a slip of the tongue and suggested that interest rates would start to rise sometime around six months after the end of quantitative easing. That admission wasn’t all that surprising, but this realization did cause the yield on the 10-Year Treasury Note (TNX) to shoot higher.

The Fed meets again April 29-30, and what the FOMC decides to do regarding a further taper, what it writes in its accompanying statement and what, if any, slips of the tongue might come from Yellen puts the Fed front and center in Q2.

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