What To Expect From FOMC Minutes?

The following are the expectations for today's FOMC September meeting minutes by the economists at Goldman Sachs, Barclays Capital, Citibank:

Goldman Sachs: The minutes from the September FOMC meeting will be particularly interesting, given the Committee's unexpected decision not to taper asset purchases. Subsequent to the meeting, participants described the decision as a close call. We will be particularly attentive to any discussion of what criteria the Committee will use to determine when it would be appropriate to reduce the rate of purchases, and whether the previous guidance that purchases might be completed in mid-2014 remains appropriate. In addition, discussion of how the forward guidance might be enhanced in the future―alluded to by Chairman Bernanke in the post-FOMC press conference―will be of great interest. Finally, we will look for any further details on the thinking behind the new fixed-rate full-allotment reverse repo facility.

Barclays: At its September meeting, the FOMC surprised markets by not tapering the pace of its asset purchases. The minutes from that meeting may give more insight into why the Committee chose not to taper. We expect the reasons to include softer job growth, the downgrade of the FOMC’s real GDP forecast, higher mortgage rates, and the upcoming fiscal deadlines. We will also be looking closely at the Committee’s discussion of the unemployment rate; Chairman Ben Bernanke had highlighted it as a key driver of tapering in June but backed away from that view in September, and any insight into that change in view will be significant. Most important will be any discussion of the criteria that the Committee will use to decide whether to taper at upcoming meetings.

Citi: The main focus will be on the release of the minutes from the September FOMC meeting. With the delay of taper the major market surprise – we expect clients to comb through the release to see just how “close” the balance was. Broadly, we expect any hawkish reaction to be muted. The balance of speakers since September have weighed heavily on the dovish side, coupled with weaker ADP and ISM numbers, this has lowered the probability of an October taper to almost zero. The surprise factor would be if the minutes turned out to be less neutral than expected – falling either to the dovish or hawkish side. While a hawkish leaning might be discounted, a dovish is likely to rally rates and help with the USD sell-off. USD-CHF in particular looks exceedingly attractive.

Oscarjp: So far, the minutes were the usual opportunity to strengthen the U.S. dollar and declines in the equity markets - a lot of it was in this document votes of the need to reduce QE . This time , however, the situation is different: the tension building for a few months the Fed shocked the markets without making changes, and also significantly softening the tone currently.Minutes to answer one important question : whether the decision to reduce QE was not because the data were inconclusive ? (publication of employment data for August strongly disappointed ), or whether it is a change resulting from the informal leadership that the FOMC by Janet Yellen , which, incidentally, will be today one hour after the publication of minutes nominated to take the seat , which is now sitting Bernanke .Of course, these two options have very different implications for the dollar . In the first case, the time to buy the dollar is right now, in the second we may have to wait a longer period of weak dollar . Richard Fisher ( Dallas Fed chief ) suggested that, after all , in September decision to reduce QE was imminent. If you tell the truth and minutes to confirm the dollar could still get more expensive.

regards,

oscarjp