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Minutes-Related Volatility Could Pick Up Going Forward


Ahead of tomorrow's release, Deutsche Bank asks whether the FOMC minutes matter for markets: they conclude not, judging from subdued post-2020 excess volatility for minutes days as compared to FOMC meeting days (chart attached). The stars in the chart indicate statistically significant differences in volatility - if anything, it's lower on minutes days than on meeting days.

  • We'd posit that this is the product of careful messaging by the FOMC and massaged in Powell press conferences post-2020, with few surprises evident in recent post-meeting minutes.
  • However it's also a result of general unanimity among participants, as we've seen very few dissents since the pandemic cuts, through the hiking cycle (the last one was in July 2022).
  • As our Policy Team pointed out prior to the June meeting (see "Fed Most Divided Since Start of Hikes, More Loom"), the Fed is at its most divided since the start of the hiking cycle, and we could see that begin to be reflected in the minutes.
  • That could mean more "interesting" minutes going forward - our preview of tomorrow's is here.

Source: Deutsche Bank

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