FOMC Preview: Dashboards, Dissent, & "Degree-Of-Accommodation" Differences

Tyler Durden's picture

"More of the same," should summarize today's FOMC statement. There will be no press conference or refresh of the 'dot plot' economic projections. The Fed is expected to continue to taper by $10 billion with confirmation that the "growth meme" is playing out just as they projected (especially after today's GDP print). Goldman believes the focus will be on the jobs 'dashboard' and recent inflation data enables the dovish Fed to argue recent moves were noise and stay easier for longer. The downside risk (for markets) may be that Fed hawks will likely have little luck in altering the way forward guidance is employed by the Fed (and chatter over a Fisher dissent is possible).



  • Fed expected to taper by USD 10bln again, taking monthly bond buys down to USD 25bln from USD 35bln
  • Yet again, all focus on rate pathway and projections for the first Fed Fund Rate (FFR) hike by Fed officials
  • There will be no press conference from Fed Chair Yellen or release of Summary of Economic Projections alongside the decision

TAPERING: The latest announcement from the Fed which coincides with a slew of key economic data such as an initial estimate of growth in the Q2 and the monthly jobs report release by the BLS is expected to result in the Federal Reserve members agreeing on another USD 10bln taper. Likelihood of a larger USD 15bln taper are rather small, as this would almost inevitably risk resulting in a repeat of the “taper tantrum” price action observed last year.

RATES: The accompanying statement is likely to be tweaked to emphasise not only the pickup in growth, but also the subdued and contained nature of inflation expectations. At the same time, members of the Federal Reserve board will continue to actively look at various price measures including wage inflation and debate on the best method for raising rates. As such, despite a potentially more upbeat statement, Fed hawks will likely have little luck in altering the way forward guidance is employed by the Fed, with Fed Fund Rate futures pricing in the first rate hike in June 2015. There is however a risk as noted by analysts at JP Morgan that changing description of unemployment from “elevated” to “somewhat elevated” would allow for a more gradual pivot toward recognising progress toward full employment mandate and therefore could pose a risk to current projected rates path. No one on the FOMC is expected to dissent this time although there is an outside chance that Fisher could, after recently saying that waiting a “considerable time” for the first rate hike implies too long a wait.

MARKET REACTIONS: Given the expectation of a more upbeat picture on the employment situation, there is a risk that that the decision could be interpreted as slightly more hawkish as the Fed move nearer to full employment. At Yellen’s semi-annual testimony, the Fed chair suggested rates could rise sooner than is currently priced in if the employment situation improves and hence there is a risk of USD strength, downside in Treasuries, steepening of the Eurodollars curve, and downside in equity prices. Conversely if the FOMC continue to state that unemployment remains elevated, then the statement will likely be viewed as more dovish and could weigh on the USD. It is worth noting that due to the close proximity of this decision to the release of US GDP and Nonfarm Payrolls that any market reaction could be relatively muted.


Goldman expects very little change to the FOMC statement.

The FOMC might choose to upgrade the language on growth in economic activity somewhat, and it might also strengthen the language on labor market indicators a touch in recognition of the strong June employment report.


For the most part, however, recent data have supported the characterization of current conditions in the June statement. In particular, the softer June CPI print likely reinforced the Committee’s decision to downplay the firmer inflation prints seen from March to May, and weak housing starts and new home sales reports have likely reinforced concern about the housing sector.

But suggest the focus will be on the jobs dashboard:


Credit Suisse is a little more hawkish:

The easing should end with the Fed’s final QE3 purchases in October. And if current economic and price trends continue, we expect the Fed to adhere to its forward guidance and reduce the degree of policy accommodation.


An adjustment in accommodation probably still is far from imminent, but we now expect the Fed’s first interest rate hike to come in Q3 2015 rather than our earlier expectation of Q4 2015.


In its June 18 policy statement, the FOMC “reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate,” and it will probably do the same on July 30. In fact, we look for few changes in language from the FOMC today.


Assuming continued recovery in the labor market, and modest, though building, price pressures, the Fed will be forced to change its message in the months ahead, explaining that an “appropriate” degree of policy accommodation may well become a “lessened” degree of accommodation.

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dontgoforit's picture

So, just print another $17 trillion.  What's the problem?

Al Huxley's picture

Wow, just imagine the impact that changing the description of unemployment from 'elevated' to 'somewhat elevated' would have on the economy!  How did we ever function without these monthly updates?


Just a little thought experiment - what do you think the impact would be if they BOLDED the word 'somewhat'?

dracos_ghost's picture

And let's not even think about BOLDING and Italics. Just friggin radical. These dipshits are more worried about the tuna salad being escolar than anything else. Anal leakage is so unbecoming of a Fed governor.

LawsofPhysics's picture

Further confirming that QE will end as planned but interest rates will remain pegged to zero indefinitely...


The consequences of giving only a relative few access to "free money" will be what they always are.  Welcome to the new fuedal "dark ages".

hedge accordingly...

101 years and counting's picture

Taper by $15B this month with hints QE will be finished after the next FOMC.  1 month ahead of schedule.  Bonds are pricing it in.  

viahj's picture

i gave that a thought as well.   if QE is ruining the USD (with BRICS bank, collateral shortages and end of GRC looming) wouldn't they be desperate to end QE?  not that our mystery Belgium buyer will stop anytime soon. 

dontgoforit's picture

So maybe we should all borrow $xxxxxx.xx - the maximum we can borrow @ x% (current rate) - and then loan it out at three times current rate in a couple of months?  Bank of You.  You Bank.  U-Bank. Or, iBank.  Eubank.  Bob Eubank(s) - get a date with the spamming moron who's making $9500 last week with the mattress on her back, etc,  Instant wealth.  The Federal Reserve Bank of You.  FRBY. 

RiskyBidness's picture

Yellen must be tired of sucking cock! This glory hole is getting old isn't it ole yeller!!

q99x2's picture

Up my Brussels. Yellen muthafucka.

Bill of Rights's picture

It is becoming clear that the present methodology for calculating GDP is becoming increasingly less relevant as a measure of the economy. M3 was dropped for less.

They knew what was coming therefore M3 was dropped for a reason.

Itchy and Scratchy's picture

I hopin' for all kinds of fancy scientific complicated economic terminology & theory! I can't git enuf of it!

ekm1's picture

My estimation is that QE is currently running at $150-200 billion per month

Itchy and Scratchy's picture

Lol! Gud 1! Comment du jour!

ekm1's picture

FOMC has absolutely zero power.

They do whatever told by Congress and White house, lest some "accidents" might happen.


The current financial system is about who controls trading computers, not about interest rates

SheepDog-One's picture

You think the buttbous in Clowngress and white hiz tells the hundreds of years old global central banksters what to do? That's silly.

ekm1's picture

Bank lobby owns white house and congress, hence congress orders the Fed what to do.


Controlling congress is the clue to controlling the Fed.

SheepDog-One's picture

Wait, the Fed IS central banksters.

ekm1's picture

Not so.

The Fed is bunch of academics that do theatre and are clueless.


Oligarchs wants to control money printing. It could be bank lobby, oil lobby, pharma lobby, military complex or an alliance of any of those, or all of them.

SheepDog-One's picture

You're just completely wrong, sorry....the Federal Reserve is the major world banks, it's just a fact.

ekm1's picture

That is how it started but then when military complex took full power in early 60s, things changed.

They owned the Fed a long time until they trusted bank lobby in the early 90s only to be back stabbed by them now.


They are enraged

SheepDog-One's picture

OH I see, the military now runs the banks, cool story bro.

ekm1's picture

Military controlled bank lobby until about mid nineties then let them loose, trusting them


Bank lobby back stabbed them now

LawsofPhysics's picture

Unfortunately, printing money and handing it out to only a "chosen few" will end as it always does....  exponentially more so in today's global eCONomy.

interesting times...

ekm1's picture

Those chosen few are not accepting new members.

Expect assassination soon unfortunately, if this continues.

Duffy's picture

So, I'm sorry - the Fed won't raise rates, unless they do?


Or is it they will, unless they won't?

Chupacabra-322's picture

Slavering today as the False Narrative GDP numbers where published along with the accompanying PsOp's / Propagandist / Statist script read by the Criminal UNITED STATES, CORP. INC. CEO.

What is transpiring today is EPIC in proportion in the grand scale of things both in present & in Histories past.

________ (Insert your God) help us.

We are Goverend by Children, Psycopaths / Sociopaths, the Insane & Megalomanics.

Squid Viscous's picture

just get fucking long, every time these kikes open their pie holes it's more money printing and low rates until... whenever = "bullish"

we will keep rates low until the meshugganah returns

dontgoforit's picture

"until the meshugganah returns."  LOL - I haven't heard that term in a long time!

Itchy and Scratchy's picture

I'm fully expecting if inflation hits 10% the FED will raise interest rates to 1.0%.

B2u's picture

What about inflation?  Oh....just like history shows, the Fed will be late again...

SheepDog-One's picture

Lemme guess, Goldilocks everything.

Squid Viscous's picture

i'm up 18% on my LOCO trade, should I sell here?



hustler etiquette's picture

so does one buy at these levels? wonderful wednesdays might be the new turbo tuesdays

Itchy and Scratchy's picture

The only reasonable & fair thing for 'I Never Saw It Coming' to do is to penalize savers with negative interest rates for another 6 years! Then she can raise rates to +0.5%!

I Am Not a Copper Top's picture

What is the Over/Under on Hilsenrath's puff piece?

Duffy's picture

theoretical question for you economics and financial genius whiz types:

What would happen if Congress passed a law, taking away the Fed's power to set interest rates, and it was just left up to the particular bank/lender, i.e. the market?

Just a thought experiment, I know this will never, ever happen.



lasvegaspersona's picture

We suspect the 4% GDP number was ...well not exactly random but certainly when it can be off by 30 fold as it was in Q! 2014, that there was some wiggle room in how the 'facts' were presented.

We wonder if there will be regret when the Q3 numbers have to be told just before the elections. Maybe they will wish they had come in low Q2 so they could 'bust out' some really great Q3 numbers.

Of course if they show us corrected numbers on August 28 maybe they can still salvage that strategy. Eventually there will be problems because in the end all the 'facts' need to balance out. All the info presented monthly needs to add up to what is shown for the quarter. Unless of course the plan is to just straight out lie and hide numbers. That may be what is required in the end anyway so maybe none of this matters.


OT... I'm in Northern Illinois and Southern Wisconsin for the Oshkosh EAA airshow...and the corn crop looks really good. Maybe we could use stuff we produce and trade our way to a better life through commerce....just kidding...we have the reserve currency, why go through all that work when we can borrow or just print.