After last week’s jobs report surprised to the upside, FOMC member and Atlanta Fed President Dennis Lockhart said that taper may be on the table as early as the December meeting. Coming after Dallas Fed President Richard Fisher’s comments that “markets should bear in mind that this program (QE) cannot go on forever”, the market did seem to take notice as S&P 500 futures fell to new intraday lows, although only down 1/3%.
It seems that the Fed is again trying to signal to markets that taper is alive and well and only needs a string of positive economic data to begin to do so. After the stellar jobs report last week, better US GDP, and Yellen’s pending confirmation hearing, the scene seems to be set for action. Traders had largely expected an initial taper action in September, but the government shut down delayed the move. However, since the shutdown does not seem to be showing up in any recent economic data, the Fed perhaps seems to feel that it is time to send clearer signals of what to expect.