Fed Shift Now Seems More Distant

Forget about a Fed tapering in 2013.

That was the instant takeaway for some economists on Wall Street after the delayed September jobs report showed the economy created 148,000 jobs last month, well below the consensus forecast of 185,000.

Since mid-September, when the Federal Reserve surprised most of Wall Street by not beginning to reduce its monthly bond purchases aimed at stimulating the economy, experts have been busy guessing when the central bank would finally act.

Dean Maki and the team at Barclays had been expecting the Fed to move in December - until Tuesday’s report, that is. Now they are predicting the Federal Open Market Committee, the central bank’s policy-making group, won’t begin to ease back on the stimulus until March 2014.

“Given this trend in job growth, the uncertainty created by the government shutdown, and the impending change in Fed leadership, we now expect the F.O.M.C. to wait at least until March to begin the tapering process,” Barclays wrote.

While the report ostensibly portrays an anemic economy â€" even before the shutdown â€" in the looking glass world of Wall Street, that counts for good news. That’s because the Fed’s stimulus efforts have lifted stocks by making riskier assets more appealing, while depressing interest rates and lowering borrowing costs.

Indeed, stocks opened higher, with the Standard & Poor’s 500-stock index up about 0.5 percent in the first half-hour of trading.

In other words, expect one of the most striking trends of 2013 - the sharp divergence between a weak labor market and a soaring stock market - to continue into 2014.