The U.S. Federal Reserve will remain the focus of investors this week amid a shortage of market-moving economic data and as corporate earnings from the third quarter slow to a trickle.
Of particular interest will be the release Wednesday of the minutes from the latest Federal Reserve meeting late last month when the central bank judged the American economy still too weak to start tapering its key stimulus program, the monthly purchase of US$85 billion of bonds.
But the meeting did nothing to lessen the uncertainty surrounding when the Fed might move, particularly as its sounded more positive about the economy.
There is a lot of unease about the prospect of the Fed tapering its bond purchases because this latest round of quantitative easing has kept long-term rates low and encouraged more people to invest in equity markets. The U.S. market has been a huge beneficiary of Fed stimulus, with the Dow Jones Industrials up over 20% year to date.
The gains reflected a comment by Fed chair-designate Janet Yellen that while the central bank appreciates the stimulus program can't go on forever, "it is important not to remove support while the recovery is still fragile."
But "it is also important to remove accommodation when the right time comes," Yellen told the Senate banking committee.
One expert thinks that the minutes from the October meeting will give an indication of whether the Fed was "as comfortable with the economic outlook as it was in the press statement."
They will also tell markets how divided members of the Federal Open Market Committee are in carrying on with the asset purchases.
