A Brief Note on Fed Communication

October 23rd, 2013 at 9:57 am

Some articles out today show an interesting dynamic at work regarding the Federal Reserve’s communication with markets. ┬áSimply put, by surprising the markets last month, the Fed persuaded them that they really mean it when they say they’re in data-driven mode.

Given the weaker-than-expected jobs report, most commentators now expect the Fed to hold off the taper (reducing the amount of their monthly asset buys) for another few months. ┬áThat’s a significant flip from a few short weeks ago, when markets turned a deaf ear to Fed chair Bernanke’s protestations that the start of the taper will be determined by incoming data.

Sometimes you have to surprise people to get their attention.

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