Market Insider

Taper talk pervades markets ahead of auction

Traders on the floor of the New York Stock Exchange.
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Crankiness pervaded the markets Wednesday as stocks headed south, and bond yields edged slightly higher ahead of the Treasury's afternoon auction.

Taper talk is part of the reason, as a trader note making the rounds pointed to a rumor about a think tank that sees the Fed moving to taper in January or December, rather than waiting for March, as expected by many on the street. There was also speculation that Fed Vice Chair Janet Yellen, expected to be confirmed ahead of the January meeting, would preside over that meeting rather than Fed Chairman Ben Bernanke, clearing the way for a Fed taper then.

"The market is sensitive to back and forth chatter. It's just noise ahead of the auction," said Ian Lyngen, senior Treasury strategist at CRT Capital. The Treasury is auctioning $21 billion in reopened 10-year notes at 1 p.m. EST. The 10-year yield was at 2.83 percent, well within its recent range and up slightly from 2.80 earlier in the day.

(Read more: Time for bond market to put down bets on tapering)