Let the Tapering Commence

The Federal Reserve (Fed) officially announced this week that they would begin tapering their bond-buying program. The Fed wants to keep the economy from overheating, and tapering or reducing their bond-buying program is an initial step.

When it comes to controlling interest rates in the market, which impacts economic activity, the fed uses two primary tools.

1) Adjusting the Fed Funds Rate, which affects the cost of short-term borrowing and short-term savings accounts.
2) Buying or selling longer-term bonds which affect longer-term interest rates and borrowing costs.

In other news: Corporate earnings continue to remain strong, and after a rocky September for the stock market, the markets broadly recovered and returned a 7% gain in October.

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