Deutsche: Watch Discussion About Taper Vs Hike Sequence In June Minutes

Deutsche: The June FOMC minutes "will likely shed light on discussions about the outlook for policy normalization, especially the tapering of the Fed's asset purchases."

• "As we have learned since that meeting, Fed officials hold a variety of views on the timing, composition and pace of tapering." Deutsche reminds that the range of views includes a taper "sooner rather than later" vs waiting for additional data; and some wanting a faster drawdown of MBS buys, but others seeing MBS and Tsys as "mostly substitutable in providing support".
• They also suggest market participants should watch out for "any discussion about the desired sequencing of tapering of QE purchases versus rate increases". The Nov 2020 FOMC minutes indicated that "most participants" wanted to provide fwd guidance on asset purchases ending before liftoff, as was the case a following the global financial crisis wind-down. Deutsche: "With a pickup in market discussions around this topic, it will be interesting to see if officials take the opportunity to reaffirm that previous view."
• Deutsche also sees as a highlight of the minutes being the rationale behind the upgrade to the hiking path in the dot plot.