The July FOMC minutes revealed that almost all members favored not tapering then, some additional caution on the outlook, and no discussion of operational details for tapering. Members generally supported Chairman Bernanke’s “contingent outlook” for asset purchases, with “a few” counseling “patience” while “a few others” favored slowing the purchase pace “soon.” Overall, the details appeared slightly dovish to us – consistent with the changes in the July statement. However, the initial reaction in the markets suggested a hawkish interpretation, as we predicted, as both rates and equities sold off. In our view, the minutes confirmed that it will be a game-day decision for the FOMC in September.
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