At the conclusion of the October Fed meeting and the Fed’s statement that was viewed as more hawkish than expected about the state of the U.S. economy and the Fed’s quantitative easing program, investors have given more consideration to a bond tapering occurring in December rather than in early 2014.
James Bullard, CEO & President, St. Louis Federal Reserve Bank, said on CNBC this morning that the Central Bank should not rush to a decision about scaling back its bond buying program and cited low inflation as one of the primary reasons.
“We could cite substantial progress at any meeting. However, we have got other things going on. We have low inflation” said Bullard.
“That’s why I have been willing to be patient about this. What’s your hurry? We don’t have to be in a big hurry. And I also think we have room on the balance sheet whereas maybe some others don’t think we have room on the balance sheet” Bullard added.
Bullard believes that the Fed Reserve remains data dependent when deciding about when to taper and strong employment monthly reports could bring about an earlier tapering.
“Every jobs report that continues to show more jobs being created and a tick down in the unemployment rate is going to make the probability of a taper go up” said Bullard.
On Friday the market will receive the October jobs report that is expected to show weak job gains in October when budget talks were underway in Washington D.C. and four hundred thousand federal employees where furloughed for nearly three weeks.
The unemployment rate is expected to move up to 7.4 percent from 7.2 percent.
Estimates vary from 85,000 to 130,00 non-farm payroll jobs added to the economy in October.
The briefing.com forecast is for 85,000 jobs.
The GDP report that will be released on Thursday should also provide the market with some economic impact from the government shutdown.
Today the Commerce Department said that factory orders increased 1.7 percent in September from a 0.1 percent decline in August and a 2.8 percent fall in July.