Fed minutes and speeches could force market to raise pricing for September - BNPP

Sam Lynton-Brown, Research Analyst at BNP Paribas, thinks that the July FOMC minutes and Fed speakers could shift market expectations for a September Fed rate hike.

Key Quotes

“Our attention this week will be on the release of the minutes from the Federal Reserve’s FOMC meeting on 26-27 July. Our economists point out that this year the minutes have often been interpreted differently from the post-meeting statement. While the market had a relatively muted reaction to the July statement, we think the minutes could guide the market to price in a greater chance of a September rate hike. We continue to think this should be priced closer to 60-65% than the current 20% implied by rates markets.

Fed communication this week are also crucial, with speeches by Bullard (17 Aug) and Williams (18 Aug). If our view is correct that the Fed will hike in September, rhetoric from speakers will need to turn more hawkish.”