The Federal Reserve Open Market Committee met today to assess the state of the economy and decide whether to take any action on interest rates. It appears that the Fed was pleased with recent positive signs from coincident indicators like the Index of Industrial Production and the stable behavior of the Consumer and Producer price indices. They decided the economy was right where they wanted it and announced this afternoon that, for the time being, they were going to leave the Fed Funds rate unchanged.

This put a damper on the bond and stock markets which earlier in the day had taken encouragement from the Conference Board's announcement of the preliminary value for its Consumer Confidence Index for the month of September. This month's reading was 97.4, a full five points below the revised August figure of 102.4. This was consistent with the recent drop of 8% in the University of Michigan Consumer Sentiment Index for September. Whether they were concerned over the budget upheavals in Washington or uncertain about their local economic climate, there's no question that, at the time of the surveys, these two groups of consumers were more worried about their economic futures than they were last month.

More in line with the Fed's perceptions was this afternoon's Johnson Redbook Service report on weekly general merchandise sales by chain, department, and discount stores. The reported sales for the fourth week in September were up 1.3% from the preceding month.

This mixture of news appeared to befuddle investors and traders. The 30-year T-bond closed slightly up for the day; but, the DJIA closed slightly down.

Pat Ellis

Transmitted: 95-09-26 17:04:50