The Fed Holds off on Tapering

Nearly everyone on Wall Street pretty much thought the Fed would do some sort of “tapering” of its current $85-billion-per-month bond buying scheme when it announced its decision on monetary policy today. Well, nearly everyone was wrong.

The Fed defied most expectations today and kept its foot on the monetary gas with no alteration to its current quantitative easing (QE) policy. Apparently, the central bank is still worried about a flailing economic recovery, including anemic job growth, mediocre gross domestic product (GDP) growth and the recent rise in interest rates.

The decision not to taper, at least at this month’s meeting, does not mean there won’t be any slowing going forward. The Fed still is likely to begin tapering at some point later this year. However, for equity bulls, bond bulls and commodity bulls, today’s unexpected move to keep the monetary pedal to the metal caused a lot of smiles on Wall Street.

The Dow surged more than 100 points to an intraday all-time high after the statement of “no taper” was released. The decision also sent bond yields lower (and bond prices higher), the dollar lower and gold and other commodities higher.

Today’s Fed decision shows that when it comes to markets: 1) nothing is certain and 2) you always need to expect the unexpected.

So, what is going to happen next?

We’ll find out during the next few trading days how the market reacts to the Fed’s decision, and that response will give us a good sense of what the opportunities are as we head into the final quarter of the year.

Now, more than ever, it is important to check your equity and bond watch list, and determine which areas of the market represent the best buying opportunities going forward. To find out what sectors I’m watching right now, and more importantly, to find out when to buy those sectors, I invite you to check out my Successful Investing advisory service today.