FOMC Minutes: Nothing of substance – Danske Bank

According to Danske Bank analysts, there was not much news in the FOMC minutes released last night.

Key Quotes

“The minutes revealed that while the committee was much divided, the initial cut should be seen as a mid-cycle adjustment and not the start of an aggressive easing cycle.”

“Also, the Fed stressed it wanted flexibility/optionality and that monetary policy was not on a pre-set course. All in line with Fed chair Powell's message at the press conference that left market participants a bit disappointed.”

“We want to emphasise that one should not put too much weight on the minutes given that much has happened since the meeting. The trade war has escalated further and we no longer expect a trade deal on this side of the US presidential election. The economic indicators from Europe and China have been weaker than anticipated.”

“The US 2s10s yield spread inverted briefly last week and inflation expectations have dropped further. Hence we still expect the Fed to deliver more cuts.”