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Because some kind of taper had been so widely-expected, we can assume that there were a lot of portfolios out there arranged to suit a September taper. There is talk today that perhaps the Fed is a little too concerned about the economy, that perhaps they’ve recognised some heretofore unseen weakness. My view is that this is people talking their own book.
The Fed has long been clear that they wanted to be sure that improvement was sustainable and the fact remains that we had seen lower retail sales, lower consumer sentiment and anaemic inflation in recent weeks. So by the logical yardstick of the actual data, the decision wasn’t so surprising. Going by less logical measures, such as the September FOMC meeting was one with a press conference attached, led a lot of investors to become overly presumptive of the FOMC’s actions.
Tomorrow we will hear from a handful of Fed officials, including James Bullard, serial-dissenter Esther George and Narayana Kocherlakota.
Today’s economic data has been strong. The Philly Fed survey points to a burgeoning manufacturing sector in the US Mid-Atlantic and it will be interesting to see if this is confirmed nationwide by the flash PMI next Monday. Existing home sales rose again in August, despite rising mortgage rates and the labour market continues to tick along the path of recovery.
Today was a good day for technology stocks: Tesla Motors hit a new all-time high after being upgraded by Deutsche Bank. Shares in the electric vehicle manufacturer rose over 6%. Apple gained 1.9% the day after its new mobile operating system became available for iPhone and iPad users. Its new iPhones hit stores tomorrow.