US Equity Markets Fell In Response To Possible Fed Taper

The minutes of the Federal Open Market Committee (FOMC) meeting of October 29-30 reveal that the Federal Reserve believes that a reduction of the central bank's bond purchasing program may be warranted in the next few months. The minutes said that the members, "generally expected that the data would prove consistent with the Committee’s outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months.” The U.S. dollar surged in response to the release of the minutes.

The Financial Conduct Authority in the UK is said to be expanding its investigation into the setting of global benchmarks to include gold benchmarks. There is unconfirmed speculation that the setting of the London gold fixing, which is set twice a day by five banks, is being investigated. Investigations by regulators globally have expanded since it was discovered that the London interbank offer rate (LIBOR), an interest rate benchmark, had been systematically manipulated by a number of banks. It has been estimated by traders that benchmark prices for commodities are wrong more than 25% of the time ac-cording to a recent Bloomberg survey.

The U.S. equity markets have fallen in response to the "good" news that the Federal Reserve believes that the recovery underway in the U.S. economy may warrant a tapering of stimulus in the coming months. The "bad" news was counterbalanced by resilient retail sales figures in October even as the government shutdown roiled investors. The S&P 500 lost 0.35% to 1,781.60. Earlier in Europe, bourses were lacklustre with the DAX gaining 01% while the FTSE lost 0.25%.

Commodity markets have been barely affected by the reweighting of the possibility of Fed tapering in the coming months with the major indexes gaining ground. WTI crude was barely moved at $93.30. However, precious metals were heavily im-pacted by the Fed minutes with gold losing 2.3% to $1,245 while silver fell by a similar margin to $19.80. Copper fell 0.30%. Agricultural commodities were mixed with grains lower while softs gained.