Goldman Sachs: Still On Track For A December Taper Announcement

Goldman sees the FOMC as "unlikely to deliver the first hint about tapering" at the July meeting - with Powell saying in mid-July that "substantial further progress" required for tapering remains "a ways off", the spread of the Delta covid variant, and bond market expressing anxiety about the outlook.

• "Most of the FOMC is unlikely to see a need to accelerate the start date or pace of tapering at this point."
• Future action: Taper hints in Sep and Nov, formal announcement in December ($10B Tsy / $5B MBS per meeting, last one Nov 2022). Rate hikes on the table ~ March 2023, with first hike in 3Q 2023.
• Fed to be reluctant to tweak MBS vs Tsy purchase proportions, but if they do, could be $10B Tsy / $10B MBS pace.