Deutsche: Minutes Could Shed Light On Taper Timing And Pace

Deutsche Bank expects the July FOMC minutes released Wednesday "to provide more insights into the technical discussions around tapering strategies and potentially some further clues as to what economic data points officials will focus on as they assess progress toward their goals 'in coming meetings'."

• They are looking for two themes "across the hawk-dove spectrum" that the minutes may provide more info on. On timing, both hawks and doves appear to want to see some fall (ie September onward) employment data before beginning the process for tapering. On taper pace, the question of speed of MBS vs Treasury reductions remains open.
• They see flexibility to be emphasized in the minutes: "we expect the minutes to note participants desire to maintain flexibility with respect to adjusting asset purchases and for communications during this period to stress that asset purchases 'are not on a preset course' meaning that the Committee will want to retain the option to either speed up or slow down the pace of tapering should the incoming data warrant"
• Deutsche continues to expect the Fed to "put the market on notice" ahead of an official taper announcement in November.