real-time news and commentary for investors
Wednesday, Aug 21
Part of FOMC minutes lean dovish
- The taper momentum continues, but a few dovish leanings from the FOMC minutes:
- Keeping new lead dove Jim Bullard on board, the FOMC includes in the statement its concern over the risks posed by inflation being below the 2% target.
- The Committee debated, but ended up leaving out of the official statement any talk about the taper over fear it "might prompt an unwarranted shift in the market expectations regarding asset purchases."
- Several participants would contemplate lowering the unemployment threshold (currently 6.5%) should additional accommodation be deemed necessary. Jim Bullard has recently noted the headline unemployment rate alone may not tell the most complete picture - labor force participation, wages, and hours worked suggest a somewhat weaker employment situation.
- Kansas City's Esther George put in her customary dissent from the hawkish side.
- Previous: FOMC Minutes indicate most of committee comfortable with taper.
- Full report.
- Treasurys continue along the session lows, TLT -0.55%.
- What used to be (and what may be again) the single-best repository for market fears about higher rates, Eurodollar futures sell off, the September 2015 contract down 6.5 bps and pricing in more than 100 bps of tightening over the next 2 years.
- Long-duration Treasury ETFs: TLH, TLT, IEF, DTYL, DLBL, ILTB, TENZ, ITE, TLO, EDV, VGIT, VGLT, TMF, TYD, LBND, UBT, UST, TMV, TYO, DSTJ, DSXJ, SBND, PST, TBT, DTYS, DLBS, TBF, TTT, TYNS, TYBS, TBX.
- Shorter-duration Treasury ETFs: SHY, SHV, IEI, BIL, TUZ, FIVZ, DTUL, VGSH, DTUS, DFVS, DFVL, SST, ISTB, TBZ.