Since The FOMC meeting on September 20th, when the various Fed members dropped their now infamously hawkish SEP (dot plot), things have gone just a little bit turbo across asset-classes.

The dollar is marginally stronger… and everything else is lower in price (with bonds and gold leading the charge lower)…

Source: Bloomberg

The ‘higher for longer’ narrative gained ground since the hawkish statement with the STIRs curve up around 10bps…

Source: Bloomberg

Interestingly the long-end of the yield have risen dramatically in the weeks since the last FOMC meeting (and we suspect spooked Fed members). Over the same period, 2Y Yields are down 8bps (30Y +33bps)…

Source: Bloomberg

That’s a dramatic steepening of the curve…

Source: Bloomberg

And finally, financial conditions have steepened notably in the weeks since the FOMC (though the last 2 days of flight to safety post-Israel has eased it back a little)…

Source: Bloomberg

Since the hawkish SEP, various Fed speakers have attempted – albeit very modestly – to tamp down the tone (because we suspect the rampant surge in long-end yields spooked some of them). Will the Minutes attempt to do the same with cherry-picked comments?

In fact, Powell was actually fairly balanced in his open remarks at the press conference, so we wouldn’t be surprised if the minutes had more statements of risk, fitting with the post-FOMC FedSpeak.

Here are key takeaways from minutes of the Federal Reserve’s Sept. 19-20 meeting, released Wednesday (via Bloomberg):

• All Fed policymakers agreed that the central bank should “proceed carefully” on rate decisions, and incoming data would help determine whether another hike was needed in coming months; language suggests Fed keeping door open to holding borrowing costs steady again at next decision on Nov. 1

• All officials also agreed that rates should stay high for “some time” to keep bringing down inflation, with “several” policymakers seeking to shift focus of decisions and communications toward how long to keep rates high, rather than how high to raise rates

• While officials stressed inflation remained too high, sentiment shifted further toward judging risks as “two sided” — such as either too-high inflation or too-weak employment

• “Almost all” officials supported the decision to hold the benchmark rate in a 5.25%-5.5% target range, indicating the broader 19-member Federal Open Market Committee wasn’t unanimous, compared with the 12-0 decision among voting members

Arguably, the Minutes suggest there is more of a two-sided argument for policy action (pause vs more hikes – not hikes vs cuts) than the tone at the statement and press conference.

Read the full minutes below: