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Wednesday, December 18

18th Dec - Fed Watch

Schedule and vital links for December 18
19:00 GMT FOMC statement
19:30 GMT Bernanke press conference

Real-time commentary:

Video Feeds:

Bloomberg TV


Just Do ItThe Reformed Broker

The Case for the Fed Tapering TodayWSJ

To sum up why I still say the Federal Open Market Committee will start tapering its bond-buying program at the end of its policy meeting this afternoon: It’s because it can.

The Fed is about to surprise investorsYahoo!
The Fed may introduce new "offsets" to soften the impact of a policy change at the same time it decides to tighten up on quantitative easing. Here are some of its alternatives.

5 Takeaways on How Bernanke Will Be RememberedWSJ

What Do You Need to Know About the Fed Meeting?WSJ
Jon Hilsenrath Fields Your Questions
Fed Convinced Markets That Taper Doesn’t Mean Higher Rates SoonerWSJ

A December taper: a chance to regain lost face?WSJ
Watch Rupiah, Yen When Fed StrikesWSJ
Ahead of the Dec 2013 FOMCMoney Supply / FT

Three Potential Outcomes From Fed MeetingWSJ
1) hold and wait 2) start tapering 3) announces taper date

Taper Expectations, Then and NowWSJ
This time around, a majority of investors and economists expect the Fed to keep its $85-billion-a-month bond-buying program in place, at least for the next month, if not longer. But if the experts were so off three months ago, what about this time around?

More Economists Weigh In on TaperingWSJ

"Twas The Night Before Taper"ZH
Deutsche's Joe LaVorgna Sees A $10 Billion Taper

What to Watch for From the Fed Meeting WSJ
Will they taper * What do they cut * Do they fiddle with forward guidance * What are their economic projections * How will Bernanke handle his swan song

A Look Inside the Fed’s Balance SheetWSJ
As the Federal Reserve debates whether to keep buying $85 billion of bonds a month, the assets on its balance sheet are on the cusp of surpassing $4 trillion for the first time.

US Dollar Risks And The Four Fed SurprisesZH
From the odds of a taper to adjusting forecasts and from forward-guidance communication to the chances of a cut in the IOER, the FOMC meeting in the week ahead presents upside and downside risks to the dollar in the near term; even if UBS believes the longer-term will see USD strength against both the EUR and JPY.

The Fed might taper this week - everything you need to knowWaPo

Will the Fed taper tomorrow or wait until March?TradingFloor
The Fed announces on Wednesday if the economic data merits a tapering of the monthly bond purchases. Odds of Santa-taper have increased, according to the latest polls. But does it really matter whether the taper comes now or in three months?

Do Investors Know Something the Markets Don’tWSJ
Curiously, it appears that many investors do not share analysts’ expectations for a move just yet.

FOMC Projections Preview: To Taper, or Not to TaperCalculated Risk
Clearly the data is broadly consistent with the September FOMC projections, so a small taper should not be a surprise (even if most analysts think the FOMC will wait until early 2014).

FOMC Meeting Something of a Nailbiter Tim Duy’s Fed Watch
Unless you are living in a cave, you shouldn't be surprised if the Fed decides to taper this week.  At the same time, you shouldn't be surprised if they do not taper.  Even if they don't at this meeting, they soon will.

Fed Taper Message Succeeds With Bonds Adjusting to Economic DataBB
After misleading investors with a time line for tapering its unprecedented stimulus, the Federal Reserve now is stressing that any reduction in bond purchases will depend on the economic outlook -- and the message is sinking in.

Focus firmly on Bernanke’s penultimate FOMC meeting WednesdayTradingFloor
This week’s FOMC meeting will be the year’s final major US event risk ahead of the New Year. There should be plenty of volatility potential considering the divided opinions on what the Fed will say on Wednesday.

Central Station: Taper time? Close call for FedWSJ

Ask the Economists: Should the Fed Taper in December?WSJ
Market participants are on edge about whether Fed officials will start reducing, or tapering, their $85 billion in monthly bond purchases, a program known as quantitative easing or QE.

Bernanke Defends Transparency PushWSJ
Fed Chairman Bernanke defended a push for greater central bank transparency during his tenure, arguing it is essential for public acceptance of Fed policies and can help ease financial conditions with interest rates at zero.

FOMC preview : 50:50 odds of Fed tapering next weekNordea
We believe there is close to a 50% chance that the Fed will announce tapering of its asset purchases as early as next week’s FOMC meeting. If tapering is not announced on Wednesday 18 December, we would expect it at the 28-29 January meeting. Thus, we believe the Fed is very close to an inflection point with a shift from more to less policy easing.

Great Graphic: Fed Forecasts for 2013 and What Many are MissingMarc to Market

Should the Fed Switch Its Benchmark Rates?WSJ
The Federal Reserve is testing a new bond-trading program that is working so well, some influential people think it could lead the central bank to ditch its current policy lever.

Weekly Focus: Markets prepared for Fed tapering Danske Bank
We expect the Fed to announce tapering next week but also to balance it with strong forward guidance to anchor bond yields.

Week AheadNordea
Next week’s key event is the two-day FOMC meeting, which concludes on Wednesday. We believe there is close to a 50% chance that the Fed will announce tapering of its asset purchases.

Strategy: Fed tapering coming up...Danske Bank
Fed tapering coming up, but markets are prepared.

Fed Scorecard: Where Do Officials Stand on Tapering?WSJ
Fed officials haven’t sent a clear signal of what they are likely to do. The critics of the program remain eager to start winding it down, while the supporters generally have been noncommittal about what they want to do at the meeting.

Taper Or No Taper - What The FOMC Has Really SaidZH
Deutsche believes there is a chance that the Fed’s institutional biases lead it to taper earlier then the economic data might suggest is optimal. Whilst Yellen may be able to push against some of these biases, 2014 will still see a tightrope balancing act at the Fed as economics and institution bias battle it out and increasing noise is made for forward guidance to replace QE as the main tool of monetary policy activism.

Confusion Over The Fed's [December|January|March] TaperZH
Estimates ranging from FOMC’s Dec. 17-18 meeting in Washington to Jan. or March, based on published research.

Will Low Inflation Delay The Taper Decision?The Capital Spectator

The Fed’s optionsalphaville / FT
1) Tapering 2) A change to the forward guidance thresholds 3) Adding an inflation floor to the existing thresholds  4) A small reduction in IOER 5) Other stuff

Treasury Yield Curve Steepest Since 2011 as Jobs Fuel Taper BetsBB
The difference between yields on two-and 10-year Treasuries widened to the most since 2011 as employment gains reinforced expectations the Federal Reserve is close to slowing bond purchases used to stimulate growth.

Update: Four Charts to Track Timing for QE3 TaperingCalculated Risk
I suspect the FOMC is very concerned about the low level of inflation, and also the decline in the employment participation rate. The December FOMC meeting is on the 17th and 18th.  Note: Another key is that a budget agreement is reached by December 13th.

Is a Fed taper bullish or bearish for stocks?Humble Student
Will the Fed be successful in convincing the markets that "tapering isn't tightening"? Does "not tightening" mean that risk premiums will rise, or when they remain compressed at current levels? My best guess right now is that the Fed will be moderately successful in its messaging and US stock prices will continue to grind higher into 2014.

Bullard Offers Up The Tiny Taper Tim Duy’s Fed Watch
The Federal Reserve wants to taper.  Wants very badly to taper, in my opinion.  The recent employment reports seem to be giving a green light… Whether December or January or later, policy is close to an inflection point with a shift from more to less accommodation in the works.