You can tell the market is ultra-focused on the Fed because traders are still talking about the FOMC minutes a day later.
I argued after the release that the minutes weren’t as hawkish as some of the headlines characterized them. The US dollar continued to peddle higher in Asian but those gains have now evaporated and the dollar is lower than pre-minute levels.
The discussion now focuses on a change in the current minutes from Yellen’s comments last month. The current minutes say this:
Many participants noted that if convergence toward the Committee’s objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated.
In July, Yellen said something similar but also balanced the discussion by also noting rate increases might be delayed if the economy under-performs.
Is that a big difference? Not at all.
It’s like the difference between saying “If I eat too much I’ll get fat” versus “If I eat right and exercise I’ll get in shape”. It’s not much of a change but the second one feels better to say.
