At this point the debate over the September taper is largely formulaic: the "boxed-in" Fed really has no choice: not as a function of the economy or any other irrelevant tangential factor which will be promptly undone by the tapering itself leading to the untaper in short notice, but because as we showed last week [5]one year after the Fed launched QE3, it will have 30% less gross issuance [6](i.e., deficit funding) to work with.
And yet, there are those who still cling on to every economic data point, desperate to read between the "good is bad" and "bad is good" lines, to determine if Bernanke wll delay the September announcement of a 20% lower monthly POMO total for October. To help that subset of confused but vocal pundits, we present the following table of pre-taper announcement catalysts by SocGen. As it turns out, there are really just two left before the September FOMC verdict hits the tape - the retail sales number and the Jackson Hole symposium in two weeks.
This is how those, who still haven't made up their minds about what the Fed will announce next month, should think of the two key market catalysts going forward.
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