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Mixed Sell-Side Views On Brainard's Dovishness

US OUTLOOK/OPINION
  • Biden says he could make his Fed chair pick in "the next four days", or potentially next week if sources are accurate. Powell is still favourite to be re-appointed but Brainard's odds are shortening quickly.
  • Brainard is traditionally seen as more dovish than Powell but the market reaction was relatively limited after Bbg headlines of her interview broke on 9 Nov. The bull flattening in Tsys throughout the day was reversed the day after, bank equities fell a bit under 1% on the day and DXY was almost unchanged.
  • This ties in with mixed views on the sell-side about quite how dovish Brainard would actually be. At one end, Citi see her as being markedly more dovish and would expect a bull steepening and USD weakness on her appointment.
  • On the other, CIBC recommend fading any market reaction as the FOMC is far more democratic than other central banks and Brainard has voted the same way as Powell at every meeting since she's been on the BoG since June 2014.
  • UBS sit in the middle, noting that the main difference between Powell and Brainard isn't monetary policy, but rather Brainard's willingness to tighten bank regulation.

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