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Stocks Up—On Stay-the-Course News from The Fed

Fed Keeps Rates the Same: Continues Easing (CNBC via Reuters) "The U.S. Federal Reserve said on Tuesday the economic recovery was still too slow to bring down unemployment, reaffirming its commitment to purchase $600 billion in bonds to stimulate growth and create jobs.

In a statement that contained little acknowledgment of a recent uptick in the economic data but focused squarely on high unemployment, the Fed characterized the U.S. expansion as 'continuing,' a modest upgrade from its November description of the recovery as 'slow.'"

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Fed Announcement: Alternate Coverage (NetNet) "Household spending is increasing at a moderate pace, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. (Sigh. You could learn similar facts, stated in more accurate and less tedious language, at your neighborhood tavern.)"

Treasuries Drop on Fed Announcement (Bloomberg) "Treasuries plunged, pushing the 30-year bond yield to a seven-month high, as Federal Reserve policy makers said the U.S. recovery is continuing and maintained a $600 billion program of debt purchases.

The extra yield investors demand to hold 10-year notes over 2-year debt was the highest since April on speculation President Barack Obama’s agreement to extend tax cuts will win passage in Congress, supporting growth and stoking inflation. Retail sales rose more than forecast, and producer prices increased the most in eight months, government reports showed."

Economists Lift Outlook on Improved Sales Data (Wall Street Journal) "Many economists are responding to today’s merry news on consumer spending by increasing their overall economic growth forecasts. The Commerce Department reported Tuesday that retail sales increased by 0.8% last month, rising to the highest level since November 2007 and the fifth straight monthly gain. Meanwhile, sales in October surged 1.7%, revised up from a previously estimated 1.2% increase. That spells better news for fourth-quarter gross domestic product growth."

Diplomat Richard Holbrook Remembered (New York Times) "Richard C. Holbrooke, the Obama administration’s special representative for Afghanistan and Pakistan since 2009 and a diplomatic troubleshooter who worked for every Democratic president since the late 1960s and oversaw the negotiations that ended the war in Bosnia, died Monday evening in Washington. He was 69 and lived in Manhattan."

Stocks Up—On Stay-the-Course News from The Fed (Yahoo) "Stocks rose and bond prices fell sharply Tuesday after a handful of reports pointed to a stronger economy and the Federal Reserve said it would continue with its stimulus plan. The yield on the benchmark 10-year Treasury note rose to its highest level since May. The Fed left interest rates alone after its one-day meeting but said it would keep up its $600 billion bond-buying program. The Fed said that while the economic recovery is continuing, it's proceeding 'at a rate that has been insufficient to bring down unemployment.' Stock indexes rose early Tuesday after the Commerce Department reported that retail sales rose for the fifth straight month in November. Investors were also encouraged by a report that businesses in the U.S. increased their inventories for the 10th consecutive month, a sign they are feeling more confident about the economy.