TD: No New Definitive Liftoff Signals

TD doesn't expect any "definitive new signals" on liftoff at the November FOMC. They expect the press conference to be much more likely to provide a "new signal" to markets than te statement.

• TD expects "elevated" inflation to be characterized by the Fed as "largely reflecting transitory factors."
• Statement: "We don't expect officials to use the statement to signal increased concern about upside risks to inflation, although they could express some optimism that growth will reaccelerate in coming months after sharp slowing in Q3"
• Press conference: "Powell will likely emphasize how tapering will give officials flexibility in responding if the economy evolves in a way that deviates significantly from current expectations".
• Powell likely to be asked again about what to expect if inflation continues to overshoot 2% but labor market still seen as falling short of "maximum employment"; he's likely to refer to the longer-run statement, with the key words being "deviations" and "time horizons" of the persistence.
• Future action: No hikes until end-2023. Market was too quick to price in tightening in the last 2 cycles.