Fed Messages could keep Markets Volatile

The annual Federal Reserve gathering in Jackson Hole and the minutes of the last Fed meeting could keep markets volatile in the coming week, as traders watch for signs of when the central bank might curb its bond-buying program.

The Fed’s plans to “taper” or slow down quantitative easing, or bond purchases, has been the talk of markets for weeks, since the Fed said it expected to begin the process before year end. As it gets closer to September, when many believe the Fed may start, taper talk has been sending waves through thin late summer markets. Some better economic reports in the past week helped send Treasury yields zipping to fresh two-year highs on expectations that the economic news will be good enough for the Fed to begin reducing purchases.

While there is no official policy meeting until mid-September, Fed watchers will be dissecting Wednesday’s release of minutes from the August Federal Open Market Committee meeting for clues on how and when the wind down of the $85 billion in monthly bond purchases could occur.


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