Market Comments: As of December 31, 2013
The Federal Reserve commenced the much anticipated tapering of its quantitative easing program this month, reducing its bond purchases from $85 billion a month, to $75 billion. While a relatively small change, it sets the stage for incoming chair Janet Yellen to continue to scale back bond buying, and slowly move towards a more normal monetary policy stance. The Fed did reiterate that decisions regarding monetary policy will continue to be data dependent, and that policy will remain accommodative even after the bond buying program concludes. One of the key measures the Fed looks at, the Unemployment Rate, continued to move lower in December, reaching 7%. Equity markets ended an already strong year with further gains during the month. With tapering seemingly priced in, investors were focused on increasingly positive data out of the U.S. and overseas markets. The 10-year treasury yield broke through its previous trading rage, touching the 3% mark for the first time since 2011.