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Wrightson ICAP Preview: Fed Could Suspend Corp Bond Purchases Tomorrow


Wrightson ICAP FOMC Preview: The June minutes suggested possible that a
new Statement on Longer-Run Goals and Monetary Policy Strategy could come
as early as this meeting but Fed speakers over the intermeeting
period gave no indication that the review was being fast-tracked.

- Fwd guidance: Given that market pricing is already more dovish than any
formal policy commitment the FOMC is likely to make, benefits of more
explicit guidance at this juncture are unclear. Views coalescing on
relatively soft form of inflation averaging. YCC is on the backburner.

- Balance Sheet: Our working assumption: the Fed will tilt the composition of
purchases toward longer dated maturities at some point this year, probably in
September. It's probably too early now, but would not completely rule out a
bullish surprise on this front tomorrow..

- Would not be surprising if the Fed were to announce that it planned to
suspend Secondary Market Corporate Credit Facility purchases indefinitely,
with proviso that would ramp up again if mkt conditions deteriorate.

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