What a Week: Shifting the Paradigm

Traders spent most of January pricing in strong growth and low inflation. This week the Federal Reserve itself endorsed the Goldilocks tale.

The Federal Open Market Committee kicked off the year with a paradigm shift in its policy statement. Put simply, the Fed said growth got stronger and inflation got weaker. But the central bank kept rates steady and retained its tightening bias.

The Fed warned of wage inflation, but Friday's nonfarm payrolls report shoved off any immediate threat. With a weaker-than-expected 111,000 addition of new jobs, average hourly wages rose 0.2% to a 4% year over year pace -- lower than December's scary 0.5% jump and 4.2% year-over-year pace. ...