Recent comments from various Fed Board members over the past couple of weeks indicated a softening in stance. If you recall just a couple of weeks ago when the Dow was falling by triple digits nearly every day, a comment was made indicating the Fed would stand at the ready to help markets shouldprivate note high yield returns they falter in spite of the ultimate demise of QEIII.

Yet today, as the Fed concluded their round of two day meetings, the QEIII program was in fact cancelled and not all that much happened.

In the first few moments after the Fed announcement, stocks fell by -110 but as traders began to review the comments and cooler heads prevailed, stocks recovered most of their losses. The Dow lost -31.44 to finish below 17000 at 16974.31 while the S&P slipped -2.75 to close at 1982.30. The Fed indicated increasing strength in the labor markets as one reason the Fed may in fact move on rates sooner rather than later. Perhaps as early as next spring.

This has been almost a Jekyll and Hyde reading from the Fed as comments from various members have swayed stock and credit markets back and forth between an indication of tightening to one more accommodative. Comments today show the Fed might be looking past the current economic climate with confidence the economy will both continue to grow while getting inflation closer to its 2.00% target.

In credit markets, the 30 year FNMA 3.5 coupon fell to 103.09 which was 4/32 below the opening. Mortgage rates for real estate investors then saw little movement. Now that the Fed money printing appears to be over, at least for now, investors will watch and see how bonds and Treasuries will do on their own, without the advantage of QEIII.