FOMC Minutes (1/2): BofA Eyeing Demand Vs Supply Inflation Talk

A survey of sell-side FOMC Minutes (Weds 1400ET/1900GMT) previews suggest fairly low expectations for big surprises, given that the January meeting was held before surprisingly strong payrolls and inflation data shifted the narrative in an even more hawkish direction.

• But there will be intense focus on any signposts of the FOMC's intended hiking pace, whether a 50bp hike is on the table, and any further discussion on balance sheet runoff (especially pace and potential for outright asset sales).
• BofA: "Signs that the Fed now views inflation as being demand, rather than supply driven, would make for hawkish reading. Markets will look for any discussion of the speed of the hiking cycle, and the speed of the balance sheet run-off. Are active MBS sales being considered, given the Fed's dependence on pre-pay speeds in managing the MBS portion of its balance
• sheet."
• Citi: Minutes "may give us further clues on balance sheet plans."
• NWM: The minutes "will be considered dated" in light of the latest jobs and inflation reports, so "the main takeaway from the minutes will likely just confirm what we already knew, which is that the Fed thinks the first rate hike will happen in March".