My expectations for the FED mtg are for a neutral/dovish message that is pretty well buried in the detail of the statement. I dont believe a large market reaction to it is on the docket today. There are certainly ways for that to happen but what looks more likely to me is little to no messaging from the FOMC.
Things to watch for in the statement:
Inflation: After the recent PCE lower number any change in FED language around inflation will be important. They know that of course and will likely not make changes to the "continues to run slightly below target" type of wording on core inflation expectations. I would read no comment as neutral/dovish.
Employment: Recent NFP flop, moreover how the FED contextualizes it is really what should be in focus here. A mention of the labor market's relative strength despite that flop would be somewhat revealing as would, to the flipside, a more hopeful "one off" take on it since that leaves plenty of room for dissent. I would read no comment as neutral/dovish.
Growth: I will watch for "seasonality" verbage on this as it may point to FED putting less weight on the crap number printed for Q1. More of the "one off" context. I would read no comment as neutral/dovish.
Reinvestment: This part is both complicated and simple. Complicated because markets want clues to how and when something no one really understands (or if it even matters) will happen. Simple because, in my opinion, none of those clues will be provided in any real way today and talking heads can go back to waxing philosophical about it and that's all we really need to know for now. I would read no comment as neutral/dovish.
For clarification: By 'no comment' I mean no clear and present shift from March language.
So that's my less than vibrant take on what I think will be a less than vibrant FED meeting. Who knows, could be a shocker today. But at the moment I'm planning on saving my popcorn for June.
Things to watch for in the statement:
Inflation: After the recent PCE lower number any change in FED language around inflation will be important. They know that of course and will likely not make changes to the "continues to run slightly below target" type of wording on core inflation expectations. I would read no comment as neutral/dovish.
Employment: Recent NFP flop, moreover how the FED contextualizes it is really what should be in focus here. A mention of the labor market's relative strength despite that flop would be somewhat revealing as would, to the flipside, a more hopeful "one off" take on it since that leaves plenty of room for dissent. I would read no comment as neutral/dovish.
Growth: I will watch for "seasonality" verbage on this as it may point to FED putting less weight on the crap number printed for Q1. More of the "one off" context. I would read no comment as neutral/dovish.
Reinvestment: This part is both complicated and simple. Complicated because markets want clues to how and when something no one really understands (or if it even matters) will happen. Simple because, in my opinion, none of those clues will be provided in any real way today and talking heads can go back to waxing philosophical about it and that's all we really need to know for now. I would read no comment as neutral/dovish.
For clarification: By 'no comment' I mean no clear and present shift from March language.
So that's my less than vibrant take on what I think will be a less than vibrant FED meeting. Who knows, could be a shocker today. But at the moment I'm planning on saving my popcorn for June.
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