Federal Reserve Chairman Ben Bernanke Wednesday spoke to Congress about unwinding policy, and for the first time in awhile his "taper talk" didn't make waves in markets.
Traders expect more of the same Thursday when Bernanke appears before the Senate Banking Committee to give his semi-annual address on the economy for a second day.
Bernanke testified before the House Financial Services Committee Wednesday and reinforced the message that he has been communicating for several months – that the time to cut back on the Fed's $85 billion monthly bond purchases is getting close. He also reiterated that "tapering" the bond purchases will depend on the economy, and tapering does not mean the Fed will move to raise short term interest rates.
The Fed chairman also emphasized that there's no pre-set plan, and that the time between the end of asset purchases and a rate hike could be considerable. He also made it clear that the targets the Fed is watching for rate hikes – including a 6.5 percent unemployment rate – are simply targets, not "triggers."
"It's probably the first time he didn't cause some kind of adverse or outlier reaction, or add some volatility to the markets," said Zane Brown, fixed income strategist at Lord Abbett. Treasury yields moved lower, just below 2.50 percent on the 10-year but traders said weak housing starts data also sent buyers into bonds.
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"I think we're kind of exhausted on the topic of Fed policy, and maybe we're coming to terms with the fact we're not going to know until the next Fed meeting what they're going to do. He's not giving us any new information so the market has accepted the idea that the Fed is going to taper," said Gina Martin Adams, institutional equities strategist at Wells Fargo Securities.