In U.S. stocks, SPDR S&P 500 ETF (NYSEArca: SPY) climbed 0.8%.
“Turning to this week’s Fed deliberations, FOMC members will likely recognize that the global economy has gathered momentum in recent months and that there have been no major economic disruptions in the United States,” said David Kelly, chief global strategist at J.P. Morgan Funds.
“Consequently, the Fed is likely to commence the reduction in bond purchases signaled by Mr. Bernanke after the Fed’s June 19th meeting. A lot of attention will be paid to the first move. The current pace of bond purchases is $85 billion per month and markets may react to whether the first step down is to $80 billion, $75 billion or $70 billion,” Kelly wrote in a weekly outlook. “Investors will also be looking closely at the Federal Reserve’s projections for the economy and the federal funds rate through 2016. The language used by Mr. Bernanke will also be important in the short run as he tries to convince markets that QE tapering isn’t the same as monetary tightening.”
Full disclosure: Tom Lydon’s clients own SPY and TLT.
