• We already preview this week’s events on Friday, but here’s a short recap. Highlights this week include Wednesday’s FOMC meeting, the BOJ meeting on Tuesday and a smattering of ECB-speakers throughout the week.
  • Regarding the Fed, the meeting should be a quiet affair with no change in policy or any clues that policy is about to change (i.e. be tightened). With vaccinations and economic output growth both accelerating, predictably the Fed will be more optimistic. However, we believe the US still months away from meeting the Fed’s definition of “substantial further progress” in the labor market. We need millions of job gains for that, or so our thinking goes. The most important thing that might come out of the meeting is any clues on further money market tweaks. To prevent negative rates, the Fed increased the single counterparty limit. We think any further tweaks will be to give more counterparties access. Naturally, sell-side analysts at banks are toying with the Fed doing a technical rate hike. Because that would suit the banks best.

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