US: Fed minutes in focus amongst multitude of economic releases - BBH

Research Team at BBH, suggests that there are several US economic reports today and these include durable goods orders, weekly jobless claims, new home sales, Markit flash manufacturing PMI, and the University of Michigan consumer confidence (and inflation expectations survey) in addition to the Fed minutes. 

Key Quotes

“Barring significant surprises, the data is unlikely to have more than a headline effect.  The market is convinced that the Fed is poised to hike rates in the middle of next month.  Expectations for Q4 GDP have also been lifted lately.  The NY Fed's GDP tracker rose 0.8 percentage points over the past week or so to sit at 2.4%.  The Atlanta Fed (which updates its model today) was at 3.6% last week.”

“A common retort to our bullish dollar outlook is that the market has "priced it in," usually referring to either a Fed hike or more stimulus fiscal policy.  While next month's rate hike does in fact seem to be discounted, investors remain less sanguine about next year.  The December 2017 Fed funds futures contract implies a yield of 97 bp.  That would seem to imply that one hike next year is fully discounted (that would give a mid-point of 87.5 bp).  The market appears to have gone a long way toward pricing in a second hike, but is not fully there.”

“The FOMC minutes from the meeting earlier this month will be released later this afternoon. Participation will lighten up by then, and the minutes are unlikely to tell investors anything that they did not already know.  Most participants anticipate a hike shortly.”