July FOMC Minutes Preview - Massaged More Hawkish, But How Much More? (1/3)

The prevailing expectation for the July 26-27 FOMC minutes (to be released today at 1400ET) is that it will lean hawkish relative to what was seen as an immediate dovish reaction to the meeting itself.

• MNI's own interpretation at the time (see our July 2022 FOMC Review) was that Powell's press conference messaging was more balanced than the market seemed to take it (fall in implied rates and the dollar, and equities rallying).
• The Minutes are thus teed up to be massaged in a more hawkish direction in order to reinforce a more balanced message, especially as Powell's Jackson Hole speech comes next week.
• But to the extent that is true, much of that work has already been done by FOMC presidents since the meeting.-they have largely pushed against a dovish appraisal of the Fed's outlook, and even since weaker-than-expected July CPI data. Some examples: SF Daly saying Jul CPI "some improvement but ... not victory"; Kashkari "unrealistic" to start cutting rates early 2023; Evans "I expect that we will be increasing rates the rest of this year and into next year".
• Market pricing for the September FOMC is still equivocal - could be 50bp, could be 75bp. The Fed's probably comfortable with that for now, especially with another set of jobs and inflation data between now and then (though note the Aug CPI read comes out during the blackout).