The Fed Stays on the Taper Course

The Fed stayed on course with respect to its “taper” of quantitative easing today, announcing another $10 billion reduction in its current bond-buying program. According to the Federal Open Market Committee’s (FOMC) statement:

“Beginning in July, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $15 billion per month rather than $20 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $20 billion per month rather than $25 billion per month.”

The decision came in as expected. Therefore, there wasn’t much of a reaction initially in either the stock market or the bond markets. Interest rates continue to remain stable. Despite a bit of a bounce off of the May lows, the yield on the 10-year Treasury note remains well below its 200-day moving average.

Basically, it seems like more of the same from the Fed — and when it comes to markets, the fewer surprises the better.