Fed Message Likely to be Dovish

At the end of the day, the doves rule the roost at the Fed, but expect to hear more hawkishness from behind the scenes in Wednesday’s release of the Fed meeting minutes.

There’s an especially high level of interest in the minutes from January’s Federal Open Market Committee meeting, after the December minutes rocked the markets. Those minutes, released January 2, noted that several FOMC members wanted to see quantitative easing stopped or slowed by the end of this year, earlier than expected. Even though unlikely, that comment helped drive up interest rates, and the 10-year note has held at a slightly higher level around 2 percent since then.

“The minutes should be interesting,” said Ward McCarthy, chief financial economist at Jefferies. “There’s clearly contention, and this will give us a little insight into that. I think they come out similar to December – a little confused; a little contentious; yes dovish, but not indefinitely.”


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