The Fed’s fear of a taper

For many analysts, it was what the Federal Reserve didn't say that spoke volumes.

Last week, Fed watchers, the modern financial equivalents of Kremlinologists, were out in force. Analysts noted that the US Federal Reserve failed to mention the potential impact of the government shutdown on the economy.

It also omitted a reference to "the tightening of financial conditions", which it mentioned in September. That referred to the sharp rise in bond yields, or long-term interest rates, which followed its first hint in the spring that it might taper quantitative easing (QE). Higher bond yields reflect falling prices.

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