Discord appears to be the best word to describe the FOMC minutes but the baffle 'em with bullshit seems like the order of the day:
- FED SAYS SEVERAL ON FOMC SAW QE TAPERING LIKELY WARRANTED SOON
- FED SAYS MANY ON FOMC SAID LABOR GAINS NEEDED BEFORE QE TAPER
- FED SAYS FOMC SAW FISCAL POLICY RESTRAINING ECONOMIC GROWTH
As a reminder, uberdove Charles Evans wanted 200K or more in job gains in the past two quarters. Here's the thing - the average monthly job gain in the past 6 months is... 201,000. As for the punchline:
- HALF OF THE FED INDICATED IT LIKELY WOULD BE APPROPRIATE TO END ASSET PURCHASES LATE THIS YEAR - NOT SLOW END
- A FEW PARTICIPANTS INDICATED THAT THE COMMITTEE SHOULD SLOW OR STOP ITS PURCHASES AT THE JUNE MEETING - "OR STOP"
Communication matters apparently. But the key is that taper appears (forget about an all out stop) to be coming soon - and as usual - it's all data-dependent. Aside from that, it is the usual baffle with BS schtick. Most importantly, with half the Fed saying not just taper, but flat out end to QE by 2014, we now have a full blown mutiny in the Fed.
Pre: S&P 500 futures 1644.50 (VWAP), EURUSD 1.2850, 10Y 2.66%, Gold $1250, WTI $106.45
The highlight paragraph from the minutes:
Participants also described their views regarding the appropriate path of the Federal Reserve’s balance sheet. Given their respective economic outlooks, all participants but one judged that it would be appropriate to continue purchasing both agency MBS and longer-term Treasury securities. About half of these participants indicated that it likely would be appropriate to end asset purchases late this year. Many other participants anticipated that it likely would be appropriate to continue purchases into 2014. Several participants emphasized that the asset purchase program was effective in supporting the economic expansion, that the benefits continued to exceed the costs, or that continuing purchases would be necessary to achieve a substantial improvement in the outlook for the labor market. A few participants, however, indicated that the Committee could best foster its dual objectives and limit the potential costs of the program by slowing, or stopping, its purchases at the June meeting.
Not just slow. STOP.
There will never be any MBS sales:
Most, however, now anticipated that the Committee would not sell agency mortgagebacked securities (MBS) as part of the normalization process
As for the (all cash) housing (non) recovery:
Participants generally were optimistic that the recovery in housing activity would be sustained, although a couple of participants were concerned that the run-up in mortgage rates in recent weeks might begin to crimp demand... Several participants worried that higher mortgage rates and bond yields could slow the recovery in the housing market and restrain business expansion.
The full minutes: