The Bond Market is a little skittish this morning ahead of the Fed’s last meeting of the year. At Ben Bernanke’s last meeting as Chair of the Federal Reserve, the likelihood of raising the interest rates they control directly is zero. However, there is a chance that they announce a reduction to the stimulus program known as quantitative easing. Those odds that were only at 25% up through yesterday now have another ¼ of the economists surveyed flinching; a poll out this morning place the odds of a plan to taper at 50/50.
One of the factors spooking bond traders today is the 22.7% increase in Housing Starts announced this morning, representing the largest month-over-month increase in 23 years. I think that the increase is just a matter of timing, since Building Permits in the same report actually declined 3.1%.
Technically speaking, Stocks are mixed, and Bond pricing moves sideways. I, like you, am interested to hear the policy statement at 12:00 our time. This morning, 30 year rates are in the 3.875-4.5% range.