While today's market moves (post-Bessent's OpTwist bailout) are changing things rapidly, since the last FOMC meeting, on July 19th, where Warsh held rates (hawkishly) unchanged (in the biggest surprise to market expectations in decades) amid multiple dissents, gold, bitcoin, and oil have outperformed, the dollar and bonds have lagged, with stocks solidly green in the middle...
And rate-hike expectations have plunged, erasing the hawkish shift since Warsh's first Fed meeting (thanks mostly to weak macro since the meeting)...
With Fed-watchers up in arms about him not giving the book away (ending forward guidance), they are hoping for some signs on the tea-leaves today of The Fed's reaction function (don't hold your breath) or what they are watching (still don't hold your breath).
Market participants expected the Minutes to show that hawkish sentiment on the committee was broad-based, despite the decision to hold rates steady. That could re-energize market bets on an imminent rate hike, bets that have subsided since July’s weak jobs and retail-sales data and modest CPI inflation.
However, bear in mind that the FOMC minutes are backward-looking, of course, but the editorial process – which requires sign-off from top officials – allows the Fed to selectively underscore certain messages. Given the sharp upward movement in long-term bond yields recently (before today) and concerns about Fed credibility, many are expecting officials likely to give the minutes a hawkish edit.
