The minutes of the July 30-31 FOMC meeting will be released at the top of the hour.
Any clues in the way of tapering won’t be direct. They will come in the sense of better assessments on the economy. Specifically, the Fed talked about an improved outlook in the jobs market in the July 31 statement and that kind of talk could be interpreted as a signal toward tapering.
The discussion on low inflation could also be interesting but with the market laser-focused on tapering, I doubt it makes an impact. If it does, it would be to lower tapering expectations, something that could hurt the dollar.
Analysts at Bespoke tracked recent Fed Minute stock market moves and noted several larger moves in stocks came after the release.
— Jan. 3. The S&P 500 retreated from a modest gain and declined 0.4 percent in the last two hours of trading.
— Feb. 10. The S&P 500 was already down, but fell an additional 0.7 percent after the minutes were released.
— April 10. The S&P 500 was up 1 percent by the time the minutes were released, but then the rally halted. The index edged up 0.02 percent in the last two hours.
— May 22. After rallying in the morning, the S&P 500 sank 0.8 percent after the minutes were released.
— July 10. Investors kept their cool this day. The S&P 500 edged up 0.1 percent after the minutes were released. Perhaps investors were more confident that the Fed would only wind down the program once the economy was ready for it.
One interesting point on recent Minutes comes from BAML (via Business Insider):
“The minutes are likely to sound more hawkish – recall that has been the case all year long, in part because they give a platform to more hawkish non-voters – which presents a risk that markets will again sell off on the minutes,” warned Michael Hanson of Bank of America Merrill Lynch.
That kind of hawkish rhetoric would boost the dollar. On the other side, a discussion about pushing out forward guidance further into the future could weigh on the dollar.
