FOMC Minutes to be the main event today – Rabobank

According to analysts at Rabobank today’s main event are the minutes of the September FOMC meeting. 

Key Quotes

“Although the July minutes suggested that there had been a discussion and concerns about current inflation dynamics in the US economy, the September dot-plot revealed that nonetheless the third rate hike is still pencilled in by the Committee’s members.”

“In light of the start of Quantitative Tightening this month, we will also be searching the minutes for any sensitivities to a potential market reaction following the September announcement. Given that financial markets absorbed the tightening announcement without a second episode of ‘Taper Tantrum’, such concerns –if there were any to begin with– should now be alleviated. As such, this may reassure the more dovish FOMC members that a third hike would not add to already substantially tighter financial conditions after the Quantitative Tightening announcement.”

“We still have our doubts about that third hike, particularly because of the underlying inflation trend, but the FOMC appears to have become increasingly immune to the inflation data and is still clinging to the Phillips curve. Therefore if the incoming data are not sufficiently weak to change the Fed’s mind, we will reconsider our December call.”