As the first trading day of 2014 kicks off following a banner year for stocks in 2013 with yearly index gains over 25 percent, the month of January will be a month that will see a gradual slowing of the Fed’s stimulus program and more political debate over raising the debt ceiling.
Beginning in January the Fed will begin to taper their quantitative easing program of $85 billion in bond purchases by 10 billion to $ 75 billion as U.S. employment shows signs of improvement and the overall economy begins to grow more solidly.
The Fed’s decision last month to taper their quantitative easing stimulus program has already pushed the 10 yr. Treasury over 3 percent and is adding upward pressure to longer term borrowing rates which are still low by historical standards but could impact the still recovering U.S. housing market in 2014.
Federal Unemployment Benefits Expired
In January 1.3 millions of unemployed Americans have lost their federal emergency unemployment benefits. Lawmakers on Capitol Hill are expected next week to begin looking at passing a 3 month extension of federal unemployment benefits.
President Obama and Democrats are pressuring Republicans to pass an extension of the jobless aid.
Raising The Debt Ceiling
The United States will lose its borrowing authority after February 7th unless U.S. lawmakers can agree to raise the U.S. debt limit and make some type of bipartisan deal that addresses the topic of enacting necessary fiscal reforms to tame the swelling U.S. debt which has surpassed 17 trillion.
Lawmakers on both sides of the aisle are divided over how to enact fiscal reforms that won’t jeopardize the U.S. economic recovery.
In December a 2 yr. bipartisan budget deal was reached that avoids federal sequester cuts but makes little progress in paying down the U.S. deficit.