Is the Fed finally going to taper?

By Justin Turner CIM, DMS®, CFP®

The market seems to think so.  Stocks have pulled back over the past week with investors taking profits and perhaps heading to the sidelines to wait out the US Federal Reserve’s announcement next week.  On top of weak markets, we have also seen a rise in 10 Year rates, with the 10 Year US Treasury topping out at about 2.90%.  While still low in historic terms, it is dramatically higher than anything we have seen over the last few years, and is cause of concern in the eyes of some analysts.  In Canada, bank stocks had shown signs of life following a sell-off over the last couple of weeks, but have since continued their downward move eating heavily into 2014 YTD gains in the process.

Will the Fed bring us an early present next week or will they trigger a rare end of the year sell-off and a gloomy start to 2014?  The only sure thing is that next week will be a volatile one and not only will it set the tone for the end of the year, but it could give valuable clues as to where the market might be headed in 2014.