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Yields and Stocks Rise on Fed Minutes and Remarks

The bond market turned a corner this week and reversed the year-to-date yield declines as stocks continued to climb, with the S&P 500 notching a 10% advance since Christmas Eve.  With the government shutdown heading into its fourth week, the week's economic calendar was lighter than usual, as the Census Bureau and BEA release are postponed until the government reopens.  Other than the Chinese trade and government shutdown negotiations, the focus of the week's releases was the likely path of monetary policy this year.  The minutes from the Fed's December meeting were released on Wednesday, and in contrast to Chair Powell's more strident remarks after the meeting, several committee members indicated that "the committee could afford to be patient about further policy firming."  The Fed Chair's comments since the meeting have been more in line with that conciliatory tone, soothing markets which feared a more aggressive rate path.

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