Minutes of October 29-30 FOMC minutes will be a major focus later in the US session. Markets would look for clues to solidify the expectation that Fed is currently done with the mid-cycle adjustment already. Indeed, fed fund futures are pricing in over 99% chance of Fed standing pat in December.
The messages of the minute would likely echo Fed chair Jerome Powell’s testimony last week. There he hailed that “the U.S. economy is the star economy these days.” Also, the expansion is “on a sustainable footing”. “There is no reason why it can’t last, at the risk of jinxing us, in principle there is no reason to think that I can see that the probability of a downturn is at all elevated”. Monetary policy is also “in a good place”.
New York Fed President John Williams also noted that “we’ve gotten the adjustment that we need, at least right now. My outlook really is one of continued good growth, strong labor markets, inflation around 2%. Assuming that comes true, which is the baseline forecast, I think we have monetary policy in the right place.”