Wall Street takes taper talk in stride

NEW YORK -- The "Taper Caper" is losing some of its shock and awe, in part because the Federal Reserve appears to finally have gotten its communications with Wall Street about future monetary policy properly calibrated.

On Wednesday, the Fed released the minutes of its Dec. 17-18 meeting, the get-together where they decided to start dialing back on its market-friendly bond-buying program this month.

After the release of the minutes, the financial markets yawned, rather than throwing a so-called "taper tantrum." The Dow Jones industrial average finished the day down 68 points, 2 points better than where it was trading before the minutes came out. Similarly, the 10-year Treasury bond finished the day at 2.99%, precisely where it was prior to the release of the minutes.

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Has the Fed finally gotten its message through that it plans to "taper" its bond purchases in a controlled fashion and that it will keep short-term rates near 0% for a long, long time?

The answer, it appears, is a resounding yes.

"The Fed has done a good job of telegraphing its tapering plans," says Ron Florance, deputy chief investment officer at Wells Fargo Private Bank.

The market is embracing the Fed's view that it opted to taper because they have more confidence in the recovery.

"The Fed is still a tailwind but a smaller tailwind," says Kristina Hooper, U.S. investment strategist for Allianz Global Investors.