Courtesy of our friends at efxnews.com here's six three of the best from the banks as we await the FOMC Minutes later at 18.00 GMT
Barclays Capital
Fed minutes on Wednesday will provide insight into the significant forecast revisions that were made at the March 17-18 meeting alongside the dropping of "patience" from its policy statement. The downward revision in the long run unemployment rate forecast points to perceptions of remaining spare capacity in the US economy. The markets already appear to have priced in this Fed dovishness aggressively (only 22bp of hikes priced for the end of 2015 according to Fed funds futures).
We would look to be long USDs into the minutes as these are also likely to highlight the Fed's intentions to begin the normalization process in 2015. Additionally, the decline in US yields following the March employment report also appears to be exaggerated.
We see the slowing pace of job growth as bringing the medium-term trend closer to what is sustainable given the economic outlook. However, the uptick in average hourly earnings and the continued decline in the unemployment rate suggest that labor markets continue to tighten and spare capacity is declining.
Credit Agricole
The March meeting saw the Fed remove 'patient' from its statement, but it also lowered its inflation and growth forecasts as well as its median policy rate projections. The 'dots' moved closer to market expectations for 2015 and 2016 but they still seem way above interest rates implied by the ED curve for 2017 and beyond.
Recent Fed speeches further highlighted that there is a considerable array of views on the start and speed of stimulus removal. Indeed, comments about the timing of the first rate hike ranged from indications that both June and September are 'live meetings' (Lockhart, Bullard and Lacker) to suggestions that a rate hike will come later in the year (Yellen and Fisher) and even in early 2016, when the inflation outlook will be clearer (Evans).
The March minutes should highlight that diversity of views. In addition, investors will look for indications as to whether still weaker growth abroad and a strong USD featured prominently during the discussions. It would take a clear dovish surprise - eg, evidence that the Fed is now worried about the impact from USD or a fallout from a global growth slowdown - to hurt the USD, however.
BOA Merrill Lynch
The March FOMC directive did away with "patient" guidance, but was dovish overall due to the sharp cuts in the economic and fund rate forecasts. The hawkish FOMC participants cut their funds rate forecast the most, and we will look for a discussion of the factors that guided their revisions.
However, we expect a small minority to advocate waiting longer to hike but then go more quickly; the majority appears more likely to back the idea of starting sooner but then hiking quite slowly. We expect most of the committee to support keeping a June hike on the table. Our view remains that September is more likely given the continued mixed data in the near-term, particularly on the inflation front.
We will look for more clarity on the preconditions for a rate hike. How much more improvement in the labor market is needed and in which indicators? Even more interesting, what conditions will make most voters "reasonably confident" in the inflation outlook? Several Fed officials have effectively advocated a "single mandate" approach, in which continued improvement in the labor market alone is enough to expect inflation to eventually return to target.
Markets should be especially sensitive to discussions of how further US dollar strength might affect the FOMC's views around achieving both sides of its dual mandate. We also will look for any signs that the Fed may see more persistence to the soft inflation data.
