The bond strategy team in a Goldman Sachs sees the risks skewed toward the bearish side for bonds (which is good for the dollar).

FOMC: US data have generally been solid since the last FOMC meeting, with a few exceptions. Our Economics team’s analysis suggests that recent developments should have a limited effect on the Fed’s baseline expectation for growth in the near term, although downside risks to inflation are more pronounced. We think that the end of bond purchases will be announced on this occasion. As to the statement, we expect it to acknowledge recent weaker foreign developments but include a slight upgrade to the language on the labor market. The “considerable time” forward guidance will only be adjusted slightly on this occasion, and an overhaul will probably come in December. All told, we think that the FOMC announcement will be neutral to slightly bearish (given the stretched starting point) for the rates market.

They also share a forecast for the RBNZ on Thursday (late Wed in US).

RBNZ: We expect rates on hold (Official Cash Rate at 3.50%, in line with consensus). Given developments since its September Monetary Policy Statement, we expect the RBNZ to turn more dovish at its OCR Review this week. It will no doubt reinforce that it is firmly on hold. But the key question is how much weight it places on growing downside risks to the outlook stemming from dairy sector strains and a more fragile global backdrop. The language used to describe the outlook for inflation will be particularly interesting in context of the soft 3Q2014 data. The key question in our mind is whether it moves to drop its mild tightening bias altogether and shift to a more neutral stance.

On the Bank of Japan, they don’t talk about potential hints at more stimulus and expect a milder cut in grow expectations than the consensus:

BoJ: In Japan, our resident Economics Team expects extensions in the quantitative and qualitative monetary easing scheme to be announced not on this occasion, but at the December meeting. The BOJ will also release its Outlook Report (Outlook for Economic Activity and Prices). The BOJ under-estimated the pullback after the consumption tax hike and clearly needs to cut its FY2014 forecast sharply. However, we expect only a cut to +0.5% – +0.6% (consensus +0.3%) from the current +1.0% in the October Outlook Report.

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