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FOMC minutes reveal dovish tones☕
While markets were looking like it's due for a quiet day, a supposedly stale FOMC minutes showed surprisingly dovish language suggesting that policy rates have become "sufficiently restrictive" and economic risks to be two sided. Several mentions of 'policy rate peak' had surfaced, and that "the focus of policy decisions and communications should shift from how high to how long to hold the policy rate at restrictive levels". Furthermore, 'many' officials saw downsie risks to growth, despite the current resilience, and agreed that tighter credit is likely to dampen economic activity. Finally, Fed officials commented and addressed the higher 'term-premium' for the first time in their written commentary, suggesting their growing sensitivity to the subject just as the yield curve has steepened around 60bp from their July lows.
All-in-all, the comments further cemented the apparent dovish tilt we saw from Fed officials after the weekend, pushing 30 yields down by 9bp on the day and SPX jumping 1% from their intraday lows.
