Minutes of the June FOMC meeting did not change much in the cone narrative Reuters

New York (Reuters)-Fed officials believed last month that further substantial progress in the economic recovery was “generally regarded as yet to be achieved”, but according to the Fed’s June Policy Minutes, participants expect progress to continue. meeting.

The minutes of the meeting released on Wednesday stated that the “various participants” at the meeting still believed that the conditions for reducing asset purchases would be “a little earlier than they expected”, while others felt that the signals from the upcoming data were less clear.

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Market Reaction

** A slight increase, 0.33% in late trading

** After hitting a 4-1/2-month low of less than 1.30% earlier, the exchange rate was flat at 1.3196%. Two-year Treasury bond yield fell to 0.2161%

** Cut its revenue to 0.079%

Notes:

ANDREW RICHMAN, Senior Fixed Income Strategist, Sterling Capital Management, JUPITER, Florida

“This is not a big change. I think that except that they will officially start talking about downsizing at the next meeting, I don’t think it’s a big gain, which is not surprising. And whether they do it in parallel with the purchase of mortgage support Securities and Treasury bonds, or they have slowed down more mortgage-backed securities purchases that have not yet been determined.”

“It looks like they are preparing to announce a reduction in bond purchases at the end of the third quarter or the beginning of the fourth quarter.”

Casey BOSTJANCIC, Chief American Financial Economist, Oxford School of Economics, New York

“We know that there is a disagreement between the FOMC. We know that most of them have raised their growth expectations. We know where there are disagreements on the issue of inflation, and their true satisfaction with rising inflation and expectations for the future . It also reveals some different views on the inflation lookback period, such as the time we average inflation.”

“In my opinion, the divergence is not the real growth aspect, but the inflation aspect. We know this to some extent. It just emphasizes this point.”

KAHTY LIEN, Managing Director of BK Asset Management, New York

“Today’s meeting minutes may not be as mild as investors expected, because at first some people thought they would downplay the positive outlook of the FOMC meeting itself. But today’s meeting minutes are only used to confirm that the Fed will reduce asset purchases sometime this year. I think the US dollar’s ​​response is moderate because we are publishing some weak economic reports, such as ISM data, and the decline in yield is calculated on a 10-year basis, which is 2% today. But in general, I don’t think today’s data will hinder The dollar has recovered against the yen and even against the euro because we have seen more data disappointing in the euro zone. So, most importantly, there has been no major reaction, but I don’t think this will prevent the dollar from continuing to rise.”

JOE MANIMBO, Senior Market Analyst, WESTERN UNION BUSINESS SOLUTIONS, Washington, DC

“We have already seen that the U.S. dollar gave up some of its gains after the minutes of the Fed’s meeting. Regarding the gradual reduction, when officials will start to reduce policy still seems uncertain. I would say that one thing that caused the U.S. dollar to lose a little momentum is the Fed’s recognition of the economy Substantial further progress has not yet been made… I want to say that the Jackson Hole venue still exists, but the minutes of the Fed’s June meeting are still inconclusive on when to start scaling down.”

“If you break down what has happened in the economy since the last Fed meeting, one is that concerns about inflation have faded. At the Fed policy meeting, it is clear that most Fed officials believe that the inflation outlook faces upside risks. So I think this is To some extent they occupy the edge of their tough stance on inflation.”

STEVEN RICCHIUTO, Chief Economist of the United States, Mizuho Securities America LLC, New York

“I don’t think they have figured out what they want to do. And people’s assumptions-MBS first-they make it clear that some people don’t think so.

“Basically, the committee’s debate on downsizing is uncertain, as clearly stated in the policy statement after the meeting. There is also no obvious prejudice to start using MBS instead of U.S. Treasury bonds at some point in the near future.

“The tone and substance of the FOMC meeting did not support the hawks on the street or the SEP.”

Brad McMillan, Chief Investment Officer, Federal Financial Network, Waltham, Massachusetts

“The real gain I got here is that most of the participants are talking about more uncertainty. Some people feel better, some feel worse. But the consensus seems to be that there is too much uncertainty in really making a decision Sexuality, for me, it means that they will continue to be cautious and continue the policy as it is.”

“I think this is actually a set of dovish notes, just because they as a whole don’t think they have enough confidence in the situation to make any changes.”

“A few weeks ago, the market reacted and said,’Oh my God, they are going to scale down.’ In fact, what you see is that they have no intention to scale down. They are exactly the same as before: we don’t know exactly what happened. What happened? There is a lot of uncertainty. We will continue to do what we are doing until we actually see the results based on evidence, and they haven’t seen it yet.”

RYAN DETRICK, Senior Market Strategist, LPL FINANCIAL, Charlotte, North Carolina

“(The Federal Reserve) doesn’t seem to waver too much. Some people are talking about relaxing asset purchases, which is not surprising. We haven’t got a big response here. There is nothing unusual.

“‘Temporary’ is a word we hear time and time again. They have eased it. They are opening the door to the idea that inflation may last for a while. The Fed is like a family. Obviously they don’t all agree, but These are the words of Chairman Powell, and there are no major changes to cancel this.”

BOB MILLER, Head of Basic Fixed Income, USA, Blackstone, New York (email)

“Today’s FOMC meeting minutes show that the opinions of committee members are very different, because it is increasingly difficult to ignore the huge improvement in the domestic economic environment and the improvement of the virus/vaccine-related situation.”

“Monetary policy adjustments are now on the table because the Federal Open Market Committee has become more dependent on data than on the calendar. Today’s meeting minutes reflect that a committee has begun to shift its focus from achieved economic results to more dependent on prospects. Function. Upside/downward surprises in related economic indicators should now cause financial markets to adjust the distribution of results to reduce asset purchases and eventually rise from zero interest rates.”