After almost six months of speculation the FOMC finally announced a taper timeline. The Fed will reduce bond purchases by $5 billion for both Treasuries and MBS. The initial reaction in the market was severe; however we regained most of the losses shortly after. Bernanke defended the tapering decision stating the cost of asset purchases will increase as the balance sheet grows. Meaning the benefits of buying at the current pace is not worth the risk. However, he reiterated the Fed is committed to keep interest rates low for the foreseeable future. Not to be forgotten, the Housing Start Index was up 22.7 percent, the largest increase since January 1990. This is just another sign the economy appears to be strengthening. Jobless Claims and Existing Home Sales are both announced the
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