The Federal Reserve bank reduced their asset purchased finally yesterday by $10 billion which we were predicting in our analysis throughout this week. Although, many were caught on the wrong side of the market, but the 850 word statement by the Federal Reserve bank, which Bernanke took to extreme length to make sure the US bond does not get out of control and they can calm the market nerve. I think the deal maker was the dovish forward guidance by the Fed, and the result of this filtering through in the European markets today which are trading towards their high of the day.
The fact is that Bernanke has put the ball in motion and it will be up to Janet Yellen to play with it. But, considering she is a dove herself, so every meeting going forward, will be very closely watched by the market, and further tapering of their asset purchase program will remain the main focus among traders. So, not that Janet Yellen has to decide about the tapering, but she will also have to manage the market expectation, a very difficult task indeed.