Well Ben Bernanke fooled us all as almost every economist had presumed a $10-$15B level of quantitative easing tapering coming into the day, based on the smoke signals being sent out of the Fed. Instead when it was announced at 2 PM there was no tapering the market went from negative to +1% almost instantly. With the presumed improvement in the economy this move was very surprising as the Fed is acting as if the economy is in a near depression. But whatever the case the punch bowl is at the ready and completely full and it now appears increasingly likely Bernanke will not be pulling even a small portion of it away before he leaves office. The S&P 500 gained 1.22% and the NASDAQ 1.01%. On the back of a market that had been up every single day this month other than 1, and at extremely overbought conditions this was a very significant move. Bond yields fell substantially on this surprise and precious metals rally as more "money printing" for longer than anticipated is back on the table.
Most major Wall Street banks and firms expected the Fed to slightly pare back its $85 billion monthly bond buying program, by $10 to $15 billion. But the Fed said it wasn't ready to cut back, citing a tightening in financial conditions that it said could hurt the economy and employment. The Fed specifically cited rising mortgage rates, and it also blamed Washington, where Congress is heading toward another showdown on the debt ceiling. "Federal fiscal policy continues to be a restraint on growth and a source of downside risk," said Fed Chairman Ben Bernanke.
No change to the indexes - other than they are even more extended from even the 10 day moving average at this point.
The NYSE McClellan indicator is now at a point is sees once or twice a year - below we have a 3 year chart to show you how extended. Normally a reading near 60 calls for a pullback, but a few times a year you get reading near 90. This is one of them; it happened twice in 2012 and three times in 2013. This is the highest reading - by far - of 2013.
10 year yields were kicked in the teeth, falling to the 2.7% range.
Emerging markets had a huge day...
A big day for gold....
And an even bigger day for gold miners....
Meanwhile interest rate sensitive sectors saw huge jumps as the assumption was interest rates were going up....but not so much.
