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Taper Watch '13: Maybe…. On Second Thought, Probably Not

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Among the many reasons given by the Federal Reserve for their reluctance to buy, say $80 billion in bonds each more instead of $85 billion, is that U.S. policymakers continue to refuse to make policy. Like, say, policy to keep the government operating.

Well, Boehner Ryan & Co. have decided that they will let the government keep operating—this time—and will even let it spend a few more bones. Can they have their taper now?

Sen. Patty Murray (D., Wash.) and Rep. Paul Ryan (R., Wis.), who struck the deal after weeks of private talks, said it would allow more spending for domestic and defense programs in the near term, while adopting deficit-reduction measures over a decade to offset the costs….

Some investors say that the deal could push forward the Federal Reserve’s taper timetable. In September when the central bank surprised investors and kept its $85 billion-a-month bond-buying program in place, it cited the looming budget battle as a reason for caution. But now, that risk has diminished.

Progress of a sort, but, well, no: You're probably not getting your taper next week.

The budget agreement reached by Congressional leaders brings a dose of stability to fiscal policy, but Wall Street is giving it a lukewarm reception as the deal did nothing to address the debt ceiling looming early next year.

Initial claims for jobless benefits, a measure of layoffs, increased by 68,000 to a seasonally adjusted 368,000 in the week ended Dec. 7, the Labor Department said Thursday. That was the biggest jump in more than a year….

Federal Reserve officials are closely watching the labor market as they weigh the next steps for their $85 billion-a-month bond-buying program. The stimulus effort is meant to push down interest rates and spur stronger hiring and investment.

Fed officials next meet Dec. 17-18.

Wall Street Reacts to Budget Deal: Tapering Odds Increase [WSJ]
U.S. Jobless Claims Rise Sharply [WSJ]
House Budget Vote Nears as Tensions Rise [WSJ]