I have posted up some previews of the Federal Reserve minutes already:

More now:

RBC:

  • The Fed was much gentler with their inflation tweaks than they could have been in the May statement. This is part and parcel of not wanting the market to read too much into changes that are coming at a non-press conference meeting (i.e. Chairman Powell is not there to talk market participants off the ledge).
  • That said, the mark-to-market on inflation continues to trend up. Look for the minutes to reflect a more hawkish slant on this front.
  • The other area of focus should be on the discussion around neutral rates. Even the majority of members that have pushed back against the idea of a rising neutral rate (namely, Williams) acknowledge that the committee will probably need to overshoot neutral at some point (as is typical of tightening cycles). The market currently has the Fed stopping near the lower end of neutral estimates (which is about 2.5% on Fed Funds). We think a re-pricing to a steeper tightening path will continue to play out in the months ahead.

TD:

  • The May FOMC minutes should show broad support for a small overshoot of the Fed's inflation target, consistent with adding "symmetric" to the statement. This slightly dovish message may be paired with more optimism on the inflation outlook but more concern about slowing global growth and protectionism. Markets may be exposed to dovish views after pricing in more hikes recently.

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