December 24, 2013

Market overreaction to Fed taper announcement

The FOMC delivered a dovish statement on Wednesday. The Fed reduced its purchases of securities by $10 billion a month, to $75 billion a month.

The stock market responded in a dramatic fashion, though bonds, the U.S. dollar and gold did not move all that much. In my view, the S&P 500's rise was too strong given the FOMC statement and the response of other markets.