30 Oct 2013
Flash: FOMC a non-event? – TD Securities
FXstreet.com (London) - Cristian Maggio, Senior Emerging Markets Strategist, Rates and FX Research at TD Securities
explained that later in the afternoon, the FOMC meeting ‘should’ be uneventful as there is no press conference, no Summary of Economic Projections (SEP), and no expectation that the Fed is in any position to alter the current contours of policy.
Key Quotes:
“It will therefore be difficult to transmit policy guidance, although there is a fair amount of uncertainty regarding the mindset of policymakers at this point”.
“The market reaction to the FOMC could prove binary (1) a lack of noteworthy changes to the communiqué leaves the market trading “lower for longer” as expectations point to a continuation of full-strength QE until March, testing 10yr resistance at 2.47%, below which lies an air pocket that ends at 2.31%; or (2) in the less probable scenario that the Fed is slightly more hawkish by citing improved future growth prospects, rates could come under pressure”.
“The market’s reaction is likely to be more violent in this case, however, this tone is more likely to be delivered as Fed-speak in the weeks ahead as the Fed attempts to keep froth from returning to the Treasury market”.
explained that later in the afternoon, the FOMC meeting ‘should’ be uneventful as there is no press conference, no Summary of Economic Projections (SEP), and no expectation that the Fed is in any position to alter the current contours of policy.
Key Quotes:
“It will therefore be difficult to transmit policy guidance, although there is a fair amount of uncertainty regarding the mindset of policymakers at this point”.
“The market reaction to the FOMC could prove binary (1) a lack of noteworthy changes to the communiqué leaves the market trading “lower for longer” as expectations point to a continuation of full-strength QE until March, testing 10yr resistance at 2.47%, below which lies an air pocket that ends at 2.31%; or (2) in the less probable scenario that the Fed is slightly more hawkish by citing improved future growth prospects, rates could come under pressure”.
“The market’s reaction is likely to be more violent in this case, however, this tone is more likely to be delivered as Fed-speak in the weeks ahead as the Fed attempts to keep froth from returning to the Treasury market”.