Wrightson ICAP: Powell To Push Back Against Mid-2022 Hikes

Wrightson ICAP sees the taper process being "well telegraphed", with the only decision left to make whether to start in Nov or Dec: a one-month delay could mean the Fed wants to extend the taper timeline by a month to push back against mid-2022 hike expectations, but that's not going to have much impact on market expectations.

• The Treasury refunding announcement on the same day as the Fed is crucial for supply considerations: "For all of the handwringing over the impending decline in QE support for the Treasury market, the net amount of Treasury coupon securities that will have to be absorbed by the public is likely to fall modestly over the next several quarters."
• Press conference: Powell to caution against the assumption that the FOMC intends to move directly from tapering to tightening in mid-2022.
• Though as far as sequencing is concerned, Wrightson ICAP sees the Fed as "very unlikely to continue to buy securities after the first rate hike, but that doesn't mean that a first rate hike would necessarily have to wait for the original taper schedule to come to an end in mid-2022."
• He's "likely to suggest that he personally is in no hurry to get to the liftoff phase of this policy cycle."