Fed's uncertainty weighing on markets, jobless rate fall to 7%

The U.S. stocks plunged for five straight days last week, as investors were guessing as to when the central bank will begin winding down its stimulus programme. Both the Dow and the S&P 500 showed their worst performance since September. Expectations that the Federal Reserve will start tapering the QE this month were dampened after Fed officials called for a clear plan. According to two top policymakers, Dennis Lockhart and Richard Fisher, Bernanke should telegraph the end of the current massive round of stimulus by committing to a set schedule for tapering. The third round of bond-buying programme is set up as "open-ended", meaning that the pace of monthly purchases is depended on the quality of fundamental data. Earlier this year other policymakers (John Williams and Charles Plosser) publicly embraced the idea of capping bond purchases to give market participants clarity on the Federal Reserve future steps to shore up credibility. After Bernanke's comments the Fed is starting to consider trimming QE, borrowing costs have risen sharply, posing a threat to undercut the fragile recovery. 

Meanwhile, the U.S. unemployment rate fell to 7% in November, the lowest level in five years, as employers added 203,000 new job .The data from the Bureau of Labor Statistics may have been supported by the return of federal employees after October's government shutdown.