No More Stimulus? – Federal Reserve Minutes Surprise Wall Street

“Several” concerned members of the Federal Reserve want to phase out bond-buying before the end of 2013, according to official minutes from the Fed’s December 12 policy meeting. This revelation has led traders to speculate about an early end to the program, despite appearing all-set to continue with the current open-ended stimulus plan. The idea that the Fed might end purchases sooner than expected naturally has investors feeling a little shaky.

“In considering the outlook for the labor market and the broader economy, a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases,” the minutes read, referring to the bank’s $2.9 trillion balance sheet — and asset purchases adding up to $85 million per month, as promised just last month. “Several others thought that it would probably be appropriate to slow or stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted.”

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After the release of this information, gold (NYSEARCA:GLD) and U.S. stocks dropped, the dollar rose against the euro, and the U.S. 10-year Treasury note reached the highest it has been in eight months.

“It makes you wonder,” Jefferies’ chief financial economist Ward McCarthy told CNBC. “The Dec. 12 statement made it appear some things were set in stone for quite some time… it leaves a lot of unanswered questions.”