US: Focus on equities and FOMC Minutes – BBH

Analysts at BBH suggest that the focus in North America will be on the performance of US equities, in addition to the release of January FOMC Minutes.  

Key Quotes

“In terms of data, the preliminary Markit PMIs may draw some interest, and existing home sales for January may surprise on the upside (0.5% expected).  The FOMC minutes from the January meeting, Yellen's last, will be released.  Although some have tried playing up their significance, we are skeptical.  It is clear that the FOMC statement teed up the Fed to hike rates "further" this year.  Many suspect the next dot plot will anticipate four hikes this year rather than three.”

“Perhaps the most important part of the minutes will be references to how the members are thinking about fiscal policy.  It also seems clear that official confidence in the strength of the economy and that inflation will move toward its target has grown.  Operationally, we remain concerned that only changing policy at FOMC meetings with press conferences, and only having press conferences every other meeting unnecessarily denies the central bank degrees of freedom.  We argue that a press conference after every meeting, like the BOJ and ECB hold, makes sense from a communication, transparency, and operational point of view.”

“The US Treasury will continue raising money this week.  It raised $179 bln yesterday and will raise another $50 bln today (five-year notes, and two-year floating rate notes).  The Treasury Department has indicated it will sell $441 bln of marketable securities this quarter.  It is getting a big chunk out of the way this week.”