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MNI Fed Preview - Jul 2021: A Little Closer To Tapering

MNI Fed Preview - Jul 2021

EXECUTIVE SUMMARY:

  • The FOMC will use the July meetingto debate its strategy to taper asset purchases (including timing, pace, and composition). The December FOMC looks like the most likely meeting for a formal announcement.
  • The risks to the July Statement lean hawkish, but the mood could swiftly change with Powell delivering a relatively dovish press conference.
  • Moves in yields since the June FOMC suggest increasing market concerns over the growth outlook, but it's unlikely this will persuade the Fed to change course at this stage.
FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK:

FedPreviewJul2021.pdf



Source: MNI. See Fed Preview for methodology


Sell-Side Expectations:

  • Analysts' focus is firmly on the tapering timeline, with most not mentioning their rate liftoff outlook in the July FOMC previews. Most see hawkish risks emanating from the July meeting.
  • On tapering, consensus is firmly for a December announcement with initiation in January, though opinions vary slightly on the pace / composition of the taper (some see MBS being tapered more quickly than Tsys but consensus is for $10B Tsy / $5B MBS taper pace).

Source: BBG, MNI


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