The Fed created quite the stir today by refraining from tapering its $85 billion bond buying program

The Fed created quite the stir today by refraining from tapering its $85 billion bond buying program. The market had overwhelmingly predicted a small reduction in bond purchases - so the news came as something of a shock. Major US stock indices instantly jumped over half a percent, with gold also getting a boost. Meanwhile, the USD and 10-year bond yield took it on the chin. While no tapering may have come as a surprise, it really makes sense if looking at the data. Key US economic news has been relatively weak recently, including retail sales and some housing data. Ironically, higher lending costs are one of the reasons the Fed chose not to taper at this time - ironic because it was Bernanke's comments about tapering which sent mortgage rates higher to begin with. Finally, inflation continues to run well below target.