Free Trial

### POV: The FOMC's May meeting minutes could...>

FED
FED: ### POV: The FOMC's May meeting minutes could deliver a dovish surprise
versus expectations upon release Wednesday, based on MNI`s scenario analysis.
- MNI`s base case is that the minutes are relatively neutral in tone. There
seems to be little reason for the Fed to signal that it will hint at a rate path
change. MNI PINCH shows the market has toed the Dot Plot line on guidance for 2
more fully-priced 25bps hikes in 2018, though is 1 short for end-2019.
- In a dovish scenario, the minutes could note that FOMC `members` supported the
use of `symmetric` to emphasise that an overshoot of inflation would be
tolerated, and could cite tighter financial conditions (incl flattening yield
curve), to justify caution on steepening the hike path.
- In a hawkish scenario, the minutes could downplay the `symmetric` shift by
noting that the more broad `participants` supported the change, and reinforcing
dot plot guidance for another 5 hikes to end-2020.
- The market appears to lean toward hawkish minutes based partly on recent
options trades targeting the 2019-20 sector of the curve, so either our core or
dovish scenarios could be positive for US rates.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.