Nov FOMC Minutes Preview: Analysts Eye Terminal Rate, Step-Down Talk (2/2)

Sell-side analysts mostly see risks to the minutes as leaning hawkish, at the very least cementing expectations for an upgrade to the median 2023 dot in December's next SEP vs September's editions.

• BMO: The minutes "should be quite revealing", serving clues on "how close we are getting to the end of this aggressive tightening cycle".
• BNP Paribas: The minutes could contain a "hawkish flair around the 'totality' of inflation oriented-data". Should solidify guidance for the Dec SEP median dot being raised from September's, potentially higher than 5.00%. The minutes may also show displeasure with market rate cut pricing which has helped loosen financial conditions.
• Deutsche: Look for further details on the discussion on the terminal rate and how the Fed views recent readings on financial conditions.
• ING: The tone of the discussion on a potential slowdown in hike pace will come across as dovish.
• Scotia: Watch for discussion that the Dot Plot terminal rate estimate will be revised higher in Dec, and for the frequency of opinions around timing the downshift in hikes. "Markets are priced for a downshift to 50bps in December and could be vulnerable to any indications that the FOMC is still considering a larger move." Also expect further rejection of pause speculation.
• UBS: Minutes to prominently feature the language change in the statement signalling a slowdown in the pace of hikes, but may reflect general agreement that the funds rate may need to go higher than previously assumed. Many participants would still prefer to risk overtightening vs undertightening, but many are worried about overtightening.