Investors seek clarity in next week's Fed meeting

Next Tuesday and Wednesday marks the Fed's next meeting. Ever since their last meeting on May 22, Wall Street has been in a state of confusion after the Fed's announcement of possible "tapering" of the bond-buying program in the "next few meetings," causing a rise in market volatility in stocks, bonds and currencies.

Adam Shell
7:45 p.m. EDT June 12, 2013
USA Today

Grab your calendar. Draw a circle around both Tuesday, June 18, and Wednesday, June 19. And jot down in bright red ink: "Fed's next meeting."

Wall Street has been in a state of confusion since May 22. That's the day the Federal Reserve hinted that it's seriously considering winding down its market-friendly monthly purchases of bonds that have kept interest rates low and helped inflate stock prices. The question is when.

Minutes of the Fed's May 1 meeting, released May 22, suggested that the Fed still felt the economy was too weak to take away the punch bowl too soon. But the minutes also showed that at least one voting member of the Fed's Open Market Committee wanted the bond buying to cease at its June meeting. The same day, Fed chief Ben Bernanke, during his Congressional testimony, said the Fed could start "tapering" its bond buys at its "next few meetings."

The new message marked an inflection point for markets. It set in motion a repositioning of portfolios that has caused a rise in market volatility in stocks, bonds and currencies.

Investors hope to get some clarity from the Fed next Wednesday, when the central bank ends its two-day meeting, and Bernanke holds a press conference with reporters. While a shift in policy is not expected at the meeting due to a still-weak labor market, "Bernanke's remarks could keep the level of uncertainty sufficiently high to (keep stocks in a holding pattern) very near term," says Bruce Bittles, chief investment strategist at R.W. Baird.

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