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With less than half an hour to the close in New York, the Dow was down just 5 points at 15,969, while the S&P 500 slipped 0.24% to 1787.3. These are very minor moves indeed, and are suggestive of the markets treading water in lieu of any major catalysts today.
The only major macroeconomic data today was the third-quarter employment cost index, which showed a 0.4% rise in overall costs quarter-on-quarter, with the wage component rising just 0.3%. Year-on-year the wage component of the index grew just 1.6%, the slowest pace seen since the end of 2011. This report is the latest indication that inflation remains cool, and until that trend reverses, the Fed is likely to stay its hand from scaling back its stimulus.
Fed Chairman Ben Bernanke speaks later this evening in Washington on monetary policy, but I would not expect him to be too forthcoming with revelations. Instead, I would anticipate him staying in line with the Fed’s most recent statements, namely that he has seen improvements but accommodative monetary policy is likely to be needed by the economy for some time nevertheless, with the pace of asset purchases hinging on incoming information.
The Chairman’s talk foreshadows tomorrow’s release of the minutes from the latest FOMC meeting. The area I am most interested in reading about in this summary is how the committee views the effect of the shutdown, given how the statement coming out of the last meeting made no mention of this issue beyond a succinct ‘fiscal policy is restraining economic growth.’