Preview of the Minutes of the Nov 1, 2017 FOMC meeting
The minutes of the latest FOMC meeting are due at the top of the hour.
Here are 4 things to watch for:
1) December is priced in
A December hike is 92% priced into the Fed funds futures market but the real battleground is March, which is currently at 58%. The market will be looking for signals. A hint at waiting in December would be a disaster for the dollar but it's extremely unlikely.
2) The economic outlook
The November statement upgraded the economic assessment, saying activity has been rising at "a solid rate" compared to "moderate" before. They added that household spending is expanding at a "moderate rate". Look for more color, particularly any signs of confidence that the economy could continue to improve.
3) Inflation
Core PCE was at 1.3% y/y through October. That's well-below the Fed's target and short-term indications don't point to a rapid pickup. How confident are policymakers that higher prices are coming? They've been promising something closer to target for years and rising rates in anticipation. At some point, they may want to see results rather than relying on models and faith.
4) Jobs market
How much slack is really in the jobs market? The big question the Fed is dealing with is whether or not wage inflation is coming. One argument is that structural changes have limited bargaining power for workers, others think the same rules apply and that the proof could only be months away. This one will have FOMC members on either side but a slight tilt would say a lot.
