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July FOMC Minutes Preview - BMO, ING On Potential Rate Impact (2/3)

FED
Some sell-side analysts' views:
  • BMO FICC: "The backup in Treasury yields has effectively built in a reasonable amount of accommodation for ... the FOMC minutes release...while Powell did step back from forward committing to a specific size for September’s move in favor of a data-dependent stance, the overall message reinforced the notion that the hiking campaign has further to go before a pause will become topical...[there is] a skew [for the minutes] to come in more hawkishly than anticipated. That said, the timing versus the flat July CPI print complicates the potential response in US rates – it’s well within the range of potential outcomes to see a hawkish minutes that is dismissed by investors as stale information given the interim inflation update."
  • ING: "The question is whether the Fed wants to use these minutes as a communication tool to push back against the view of a 2023 easing cycle. Post-meeting rhetoric from the Fed suggests that this is more likely to be the case....A further rejection of [current market pricing for rate cuts next year] should help the dollar. And bearish flattening of the US Treasury curve could pressure the commodity currencies."
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Some sell-side analysts' views:
  • BMO FICC: "The backup in Treasury yields has effectively built in a reasonable amount of accommodation for ... the FOMC minutes release...while Powell did step back from forward committing to a specific size for September’s move in favor of a data-dependent stance, the overall message reinforced the notion that the hiking campaign has further to go before a pause will become topical...[there is] a skew [for the minutes] to come in more hawkishly than anticipated. That said, the timing versus the flat July CPI print complicates the potential response in US rates – it’s well within the range of potential outcomes to see a hawkish minutes that is dismissed by investors as stale information given the interim inflation update."
  • ING: "The question is whether the Fed wants to use these minutes as a communication tool to push back against the view of a 2023 easing cycle. Post-meeting rhetoric from the Fed suggests that this is more likely to be the case....A further rejection of [current market pricing for rate cuts next year] should help the dollar. And bearish flattening of the US Treasury curve could pressure the commodity currencies."