The Daily Difference: Market Update January 30, 2014

The Fed has decided to continue tapering, despite recent volatility in equities and currencies. The Fed reiterated they plan on holding short term rates near zero “well past the time” unemployment falls below 6.5%. Although last month’s employment reports were terrible, we assume the impressive new home construction and S&P Case-Shiller home price numbers, coupled with the falling yield on the 10-year Treasury, outweighed one month of bad employment numbers.

The market reacted by continuing yesterday’s decline, falling over 1% across the board. Remain confident in the equity markets:  consumer confidence came in above 80 yesterday (VERY good reading), signaling consumer spending should remain robust. Nevertheless, the pullback could extend over the short term as markets determine the effect of tapering on aggregate demand.

BlogJames O'Brien